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Someone should take the fall for Ottawa’s botched Phoenix pay system

Imagine you just bought a new car – an expensive one. Perhaps a BMW.

The first time you go to use it, you shift the car into drive, and it goes backward. Alarmed, you slam on the brakes and the vehicle lurches forward, the trunk pops open and the alarm goes off.

That's something like the nightmare now facing the federal government as it scrambles to fix its problem-plagued $300-million Phoenix payroll system.

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Tens of thousands of current and former civil servants have been underpaid, overpaid or not paid at all since the new system was rolled out a year ago. In 2016, Ottawa overpaid workers a total of $140-million – most of that attributable to the new payroll system. Now, it's tax season and the system has been spitting out erroneous T4 tax slips to roughly one in six of 300,000 federal workers.

Put yourself in the shoes of newly retired employees, thousands of whom have waited months for their pensions to kick in, or the hundreds of workers going unpaid while on maternity and disability leave. And university students who now can't pay their tuition because they haven't been paid for government work stints. Many federal workers have hired accountants to deal with suddenly complex tax filings.

The mess that is Phoenix is a story of misguided political objectives, bungled management of a major technology project and a complete failure by anyone in charge to take responsibility for mistakes.

The fiasco raises troubling questions about the government's ability to perform one of its most basic functions – paying its bills and taking care of employees. The Phoenix system is just one of the major information-technology projects, totalling billions of dollars, now under way in the government.

Centralizing the multitude of separate payroll systems was the brainchild of Stephen Harper's Conservative government, which was convinced it could wring huge savings out of the bureaucracy. In charge were then-public works minister Rona Ambrose (now interim Conservative leader) and Tony Clement, former president of the treasury board. Neither has expressed any remorse for the fiasco.

The Conservatives eliminated 700 payroll jobs in dozens of departments, mainly in Ottawa, and created a new centralized pay centre in Miramichi, N.B. – political compensation for the shuttered gun registry. Most of those offered positions there refused to move, leaving the running of Phoenix in the hands of hundreds of untrained new hires.

The problem now belongs to the Liberal government, which could have delayed deployment of the system to work out the inevitable bugs. To his credit, Prime Minister Justin Trudeau has acknowledged his government initially didn't take the problem seriously.

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"I'll admit it," Mr. Trudeau told a frustrated civil servant at a town hall in Kingston, Ont., earlier this year. "This government … didn't pay enough attention to the challenges and the warning signs on the transition we were overseeing."

But the mea culpa came three months after the government had promised to resolve the payroll mess. Now, it's not even offering a target.

Just as troubling is the lack of accountability within the upper ranks of civil servants. Many of those responsible have retired or moved to other jobs in the government. No one has been fired.

Nor has there been a thorough investigation by Parliament of what went wrong. Deputy Minister of Public Works Marie Lemay, who inherited the payroll problem, appeared before the House of Commons government operations committee last year. But none of the original architects of the system have had to answer for their roles.

And then there is IBM Canada, which Ottawa hired to design and implement the system. It appears the government, not IBM, is on the hook for fixing the problems. So why, one wonders, would the government sign a contract that left it so dangerously exposed to financial and technical risk?

Phoenix was supposed to save Ottawa $70-million a year. Instead, the government has spent $50-million fixing the problem, including an extra $6-million paid to IBM, and there is no end in sight.

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This isn't just a story of a botched payroll system. It's about the chronic inability of governments to manage major purchases, including technology projects.

Unless Ottawa gets to the bottom of what went wrong on Phoenix, it will keep making the same mistakes elsewhere in the government.

That should worry all taxpayers, not just government workers.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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