Proceedings of the Standing Senate Committee on
National Finance
Issue No. 59 - Evidence - February 6, 2018
OTTAWA, Tuesday, February 6, 2018
The Standing Senate Committee on National Finance met this day at 9:33 a.m. to continue its study on such issues as may arise from time to time relating to federal estimates generally, including the public accounts, reports of the Auditor General and government finance (topic: Phoenix pay problems).
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Honourable senators, welcome to this meeting of the Standing Senate Committee on National Finance.
[English]
My name is Percy Mockler, senator from New Brunswick and chair of the committee.
I wish to welcome all who are with us in the room and viewers across the country who may be watching on television or online.
As a reminder to those watching, the committee hearings are open to the public and also available online on the Senate website at sencanada.ca.
[Translation]
I will now ask the members of the committee to introduce themselves.
Senator Pratte: I am André Pratte from Quebec.
[English]
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Eaton: Nicky Eaton, Toronto.
[Translation]
Senator Forest: I am Éric Forest from the Gulf region, in Quebec. Good morning.
[English]
The Chair: I would also like to recognize this morning, at the head table, Ms. Keli Hogan, temporarily replacing Ms. Gaëtane Lemay, our clerk, and our two analysts, Alex Smith and Sylvain Fleury, who team up with this committee going forward.
Today we want to go a little deeper in our study of the problems of the Phoenix pay system in Canada. Last week the Auditor General, who has studied the issue, somehow encouraged us to continue our study.
This morning we are pleased to welcome officials from two departments who are central to the whole Phoenix issue.
To the officials and the representatives of those departments, the objective is where are things now with Phoenix, the situation of Phoenix and how do you plan to fix it?
That said, as we know, we have over 150,000 employees, civil servants in Canada that are affected.
[Translation]
First, from the Treasury Board of Canada Secretariat, we have with us Cécile Cléroux, Assistant Deputy Minister, Human Resources Management Transformation Sector, Office of the Chief Human Resources Officer.
[English]
We also have Mr. Tom Scrimger, Assistant Comptroller General, Financial Management, Office of the Comptroller General.
Thank you for being here this morning.
From Public Service and Procurement Canada, we welcome Les Linklater, Associate Deputy Minister.
[Translation]
Also here is Marc Lemieux, Assistant Deputy Minister, Pay Administration Branch.
[English]
And also Danielle May-Cuconato, Assistant Deputy Minister of Pay Stabilization.
Welcome to all of you and thank you for taking the time to come and share the information on how to resolve this ongoing issue with Phoenix. We welcome you and we say thank you.
I have been informed by the clerk that the first presenter will be Mr. Les Linklater, to be followed by Ms. Cécile Cléroux. Following those presentations, senators will be asking questions.
[Translation]
Mr. Linklater, the floor is yours. You may go ahead.
[English]
Les Linklater, Associate Deputy Minister, Public Services and Procurement Canada: Thank you, Mr. Chair. Thank you for the opportunity to appear before you with respect to the Phoenix pay system.
I will use my time to provide a brief timeline, details on where Phoenix went wrong and what we are doing to fix it.
[Translation]
First, let me say that pay issues are unacceptable and we are deeply sorry for the hardship being felt by public servants and their families. Fixing Phoenix and eliminating its negative effects on employees is not only our top priority, but also, it is safe to say, the top priority of every deputy minister across the public service.
[English]
Public Services and Procurement Canada is responsible for administering the pay of more than 290,000 federal employees in more than 100 departments, agencies and organizations that make up the federal public service.
A number of years ago, it had become clear that the federal government’s then 40-year-old pay system was inefficient and at risk of failing.
In 2008, a House of Commons government operations committee report recommended support for pay modernization.
In 2009, the Government of Canada initiated plans for transforming pay service administration by acquiring a PeopleSoft-based payroll system from IBM and consolidating frontline pay services from across government to a new public service pay centre in Miramichi, New Brunswick.
The goal of the project was to attain a cost-effective, sustainable pay system. Obviously we have failed to achieve that objective.
Although PSPC, other departments and IBM spent six years preparing for the deployment of Phoenix, we have learned some painful lessons about critical considerations that were overlooked or miscalculated.
We now know the original planning for this major transformation project failed to take into account its full scope and complexity. Critical linkages between pay and associated HR processes and systems were not properly understood. Technology was stripped of important functionality and training and change management were ineffective and insufficient. As well, important experiences in Australia, although different from our situation, could have been more carefully studied to inform decision-making.
[Translation]
Shortly after Phoenix was fully launched in February 2016, pay issues emerged, but these were taken to be one-offs. However, by June 2016, it was clear there were major problems.
The growing number of pay issues outstripped our capacity to respond. This capacity had been significantly reduced before Phoenix went live with the elimination of more than 700 compensation positions as part of the consolidation of pay advisors in Miramichi.
We went into full crisis mode and, as an initial response, we hired additional staff in Miramichi, established satellite pay offices across the country and staffed them with more than 250 compensation advisors, and opened a client contact centre to handle employee calls for assistance.
Although pay issues continued to emerge, these actions helped to reduce the occurrence of the most serious pay problems — employees receiving no pay at all — and shorten wait times for pay changes related to parental and disability leave, which unions asked us to prioritize.
As efforts were under way to manage ongoing pay issues, we also examined the root causes of problems and needed fixes.
[English]
Two important realities emerged. First, because HR processes are inseparably linked to employee pay, it was essential to take an integrated HR and pay approach to addressing issues.
Second, it was clear Public Services and Procurement Canada, PSPC, could not alone identify and implement solutions. We needed to take a whole-of-government approach.
In November 2017, we announced an initial suite of measures designed to bring the pay system to a point of stability and, in the short term, reduce wait times and late transactions for missing pay.
These measures, in essence, represent the foundation of the HR-to-Pay integrated plan, to which PSPC and TBS committed in the Auditor General’s fall report, and they fully align with his recommendations.
Validated by employees, unions and departments, the measures are grouped within four broad areas. The details have been shared with you, I believe, through the clerk of the committee. I will now mention a few of them.
First, we have strengthened accountability and informed decision-making. This may sound like unnecessary bureaucracy, but a lack of clear decision-making authorities, with representation across government, is one of the reasons why Phoenix failed.
A joint PSPC-Treasury Board Secretariat team is now leading the overall pay-stabilization effort, both at the pay centre and across the government.
This integrated HR-to-Pay approach is being led by me, supported by the assistant deputy minister from TBS OCHRO as lead for human resources policies and processes; the assistant deputy minister and PSPC as the lead for pay administration; and the assistant deputy minister responsible for the project management office to coordinate program management, performance reporting and communications activities.
A stronger governance model was put in place, in the spring of 2017, that brings together intelligence from across the public service and is supporting the work of the team.
This includes a ministerial working group, chaired by Minister Goodale, interdepartmental working groups, and a deputy head oversight committee, chaired by the Deputy Clerk of the Privy Council and Associate Secretary to the Cabinet, Andrea Lyon.
[Translation]
Recognizing the need for external help beyond the public service, we are also setting up an expert advisory panel to validate our decisions. This will not be the first time we’ve sought external advice. In addition to the Auditor General’s important work, we have benefited from a lessons learned report prepared by Goss Gilroy that clearly identifies numerous gaps in planning and implementation. This information is directing our path toward stabilizing the pay system, and it will also inform the management of future large-scale projects.
As part of our focus on accountability, we are committed to transparency. We provide all departments and agencies with monthly dashboards to track our progress, and we are improving our performance measurement reporting.
The second area of action is improving processes and technology. Pay processes and human resources systems are inextricably linked, and technical conflicts between Phoenix and the patchwork of 32 HR systems across government have contributed to slowdowns. Our goal is to have a holistic, aligned system from initial staffing to pay request to pay receipt.
In addition to technology, we are looking at how work is organized to achieve efficiencies. At the pay centre, we’ve piloted a new approach that organizes compensation experts into pods that specialize in specific departments or transaction types. Early indications suggest that this approach can help reduce our backlog.
We are also redesigning the HR processes that are creating many of the issues, such as transfers in and out, terminations and pay for acting positions.
[English]
Third, we are increasing capacity and service. We have added, and continue to add, more staff at the pay centre and satellite offices to address the backlog. We are making improvements to our call centre, where agents will soon have access to Phoenix and be able to provide employees with more information about their issues.
Lastly, we are ensuring strong engagement and partnership at every level. Union-management committees meet regularly to share information and discuss issues related to pay. Additional mandatory training on best practices, roles and responsibilities and how to prevent pay delays is now available online to employees and managers. Over 80,000 unique users have already accessed at least one of the mandatory courses.
Unlike the old system, where departmental staff handled requests, Phoenix requires employees and managers to make their requests electronically themselves, and it works best when requests are submitted without delay, as opposed to retroactively. Our training emphasizes this and other important changes needed to avoid additional pay problems.
A table outlining all of the measures we are taking, the deadline for completion and their status has been posted online. We will update regularly as progress and actions evolve, and we will build on these measures over time, drawing on our governance to identify process and technology changes and improvements that will stabilize HR to pay as soon as possible.
[Translation]
We are committed to providing information to employees on progress to resolve pay issues. We post a monthly dashboard that shows the number of outstanding transactions at the pay centre. Our progress has been slow. Last year, the government negotiated 21 collective agreements, many of which had been expired for several years. The time-consuming job of calculating retroactive payments has come at the expense of reducing the queue of transactions.
We have also dedicated employees to addressing overpayments to ensure employees have accurate T4s and RL-1s for tax season. We are taking steps to ensure that employees do not experience financial hardship as a result of overpayments. Once these priorities have been addressed, we expect to make greater progress in addressing the queue.
[English]
Mr. Chair, I’ve described an extensive series of measures we are undertaking, but complex problems often provoke simple questions. In this case, many people want to know why we don’t simply scrap Phoenix and implement a new pay system.
The reality is that public service pay is complex, and a new system would be years in the making. That’s not to say that we shouldn’t consider alternatives, but, in the meantime, we have to keep paying the close to 300,000 public servants every two weeks. We have no immediate choice but to bring Phoenix to a point of stability, where pay is being provided accurately and on time. This is our priority, and the Auditor General himself has noted the importance of staying focused on improving the current system.
The other question I often receive is about IBM and their role in all of this. Mr. Chair, Phoenix is far from perfect. There are issues with the technology, but IBM essentially delivered what they were contracted to do. We continue to work closely with IBM to implement technical enhancements and needed fixes.
[Translation]
Let me conclude by noting that the employees of Public Services and Procurement Canada pride themselves on the excellent delivery of a huge range of services — from keeping the Public Accounts of Canada and procuring $18 billion a year in goods and services to preserving the buildings here on Parliament Hill and providing the translators in this room — among many other functions crucial to the functioning of our government and our democratic system.
In the case of Phoenix, it is clear that we failed to live up to these standards. We take full responsibility for that. We apologize to the many public servants who have suffered from pay issues. We are doing everything we can, as quickly as we can, to put an end to their frustration. To be clear, there is no quick fix, but we will make steady progress until those missing pay receive it.
As we proceed, we are grateful to the dedicated employees at the pay centre in Miramichi, and others across the country, who are dealing with the fallout of a situation that was not of their making.
I look forward to your questions. Thank you.
The Chair: It is now Ms. Cléroux’s turn.
Cécile Cléroux, Assistant Deputy Minister, Human Resources Management Transformation Sector, Office of the Chief Human Resources Officer, Treasury Board of Canada Secretariat: Good morning. Thank you for the invitation to appear before your committee to discuss the Phoenix pay system. As assistant deputy minister of the HR Management Transformation Sector in the Office of the Chief Human Resources Officer at the Treasury Board of Canada Secretariat, I oversee the determination and coordination of the different IT systems that support human resources management in the Government of Canada. My sector was created in February 2017, and I oversee the coordination of the secretariat’s response in support of the efforts Mr. Linklater just described.
[English]
Let me first reiterate that the current situation with the Phoenix pay system is unacceptable.
On behalf of Treasury Board Secretariat, as the representative of the employer, I would like to express our deepest regrets to all employees, and in particular to those that have been directly affected by this situation that unfortunately has been ongoing for close to two years.
[Translation]
My secretariat colleagues and I are fully committed to doing our part in ensuring that public service employees are paid accurately. The secretariat would like to thank the Auditor General for his analysis and recommendations on how to stabilize the pay system. His report provides important input into the work under way.
[English]
This morning, I’d like to speak to his two recommendations for the Treasury Board Secretariat specifically. The first is that the secretariat should establish, with Public Services and Procurement Canada, timelines for departments and agencies to submit accurate pay information and support PSPC and departments and agencies in the development of performance measures to track and report on the accuracy and timeliness of pay. We agree with this recommendation, and work is already under way towards fulfilling this commitment. In collaboration with PSPC, we will establish standardized timelines for HR transactions that lead to pay action by June 30, 2018.
We will also work with departments and agencies to establish and implement a comprehensive approach that links the HR world to actual pay processes. To better track and report on pay actions, we will set out performance measures that will be rolled out in the coming fiscal year 2018-19.
[Translation]
We will collaborate with departments and agencies to track and report on key HR metrics, including the timeliness of transactions which have consequences on our employees' pay.
[English]
The importance of our ability to track and report on our progress to stabilize pay is underscored by the challenges faced with meeting our collective agreement implementation deadlines.
Last week, TBS admitted to the Federal Public Sector Labour Relations and Employment Board that the Government of Canada failed to comply with the timelines for implementation of the Public Service Alliance of Canada collective agreements. We understand the frustration this has caused. We continue to work diligently with departments and agencies, and most especially Public Services and Procurement Canada, to implement all signed collective agreements as quickly as possible.
The Auditor General’s second recommendation for the secretariat is on cost. He recommends the secretariat, again with the support of departments and agencies and Public Services and Procurement Canada, should track and report on the cost of resolving pay problems and implementing a sustainable solution for all departments and agencies.
We also agree with this recommendation. The Comptroller General of Canada is leading a government-wide exercise to better understand the full picture of actual costs.
[Translation]
That work is under way. It’s a rigorous process, based on international best practices.
[English]
We will be able to determine costs incurred to date and put in place a framework to track future costs. Departments and agencies, as well as central agencies, will be consulted to ensure proper understanding of the data.
[Translation]
We expect that exercise to be completed by May 2018.
[English]
In closing, let me reiterate that the secretariat senior management team is, and has been, fully engaged on this file. The Auditor General’s recommendations and the resulting efforts to address them will contribute significantly to work already under way.
[Translation]
Mr. Chair, my colleague and I are now pleased to answer the committee’s questions.
[English]
The Chair: Thank you very much, Ms. Cléroux.
Before we go to Senator Marshall, I would like to ask Senator Andreychuk and Senator Neufeld to introduce themselves, please.
Senator Andreychuk: Raynell Andreychuk, Saskatchewan.
Senator Neufeld: Senator Neufeld, British Columbia.
Senator Marshall: Mr. Linklater, in your opening remarks you mentioned the implementation and the involvement of IBM, but I understand that the Auditor General is going to do an audit on that. I’m going to focus my questions completely on the report of the Auditor General.
I have two questions, which I raised with the Auditor General when he was here. Who is in charge of resolving the pay problems? The Auditor General talked about a lack of a governance structure, and in a paragraph there he keeps talking about all the committees and individuals involved. But there must be one person who is overseeing all of this and making sure that whatever needs to be done is being done. Could somebody address that issue?
Mr. Linklater: I’d be happy to. I’m the individual who is responsible for overseeing the recovery plan for Phoenix through the HR-to-Pay integrated team.
Senator Marshall: Since when have you had that?
Mr. Linklater: I took on this role in late June.
Senator Marshall: Everybody is talking about the plan. Is there a plan? Right now there’s not much confidence in what the department or the government is doing to resolve the problem. People keep talking about the plan. They are still using a word for the future, such as “we will be doing this” and “we will be doing that” and “we will be doing something else.” But what’s the plan? And is there an actual plan in effect right now?
Mr. Linklater: Yes. Thank you for the question. Since the integrated team was pulled together in late June, we’ve been working across PSPC and the Treasury Board office of the Chief Human Resources Officer to make sure we are looking at the pay issues experienced from the continuum of HR-to-pay. Pay is a function of human resources actions and transactions. We need to ensure, in addressing the root causes of issues that employees are facing with their pay, we understand what the implications are from the HR perspective through the continuum.
As part of that work, over the course of the summer and fall, we worked with some outside help, with PriceWaterhouseCoopers essentially, but also with departments and agencies through a number of exercises to drill down on a number of key issues affecting outcomes with pay. We have essentially published a first wave of initiatives. It was released in November. Minister Qualtrough released this suite of measures.
Senator Marshall: Is that something that has been done or is this something that is going to be done?
Mr. Linklater: They are things we are working on now and have made progress against a number of the 22 measures that have been published. As I said in my opening remarks, we’ll be reporting our progress against that on a quarterly basis.
Senator Marshall: We’re talking about results. What results have you seen so far? For example, the Auditor General reported on half a million transactions. Are they declining? Have accurate T4s now been issued to staff? Have the collective agreements, those transactions, been processed? Could you convince us there’s actually something happening and that some progress is being made?
Mr. Linklater: Thank you for the questions. I also mentioned in my opening remarks that every month we are publishing a dashboard that’s tracking primarily the work at the pay centre, but we have started following the report of the Auditor General to include key indicators from departments and agencies served outside of the pay centre.
The goal here is to identify for employees what the pending workload is at the pay centre and particularly transactions that have a financial impact, so those issues that will affect the pocketbooks of our employees.
Based on the recommendations of the Auditor General, we have broadened that reporting now to include the entire workload at the pay centre so that individuals understand with complete transparency what our compensation advisers have in front of them in terms of workload.
Senator Marshall: Are you making progress? That’s my question. Do you notice that you’re getting ahead, you’re getting the transactions processed and are the outstanding ones decreasing?
Mr. Linklater: Over the course of the late summer we had made some progress in reducing the queue, but that period converged with our efforts to implement the collective agreements that had been negotiated.
Unfortunately, we had not appropriately planned or forecast the workload associated with collective agreement implementation, and as my colleague referenced in her remarks we have, in essence, failed to meet a number of the legislated timelines.
There is some progress, though, in terms of meeting service standards for maternal, parental leave and disability leave. Through some of the innovative work we’re doing at the pay centre around work organization through a pod concept, we’re seeing an ability to focus on keeping new transactions dealt with and working with the backlog for three departments who are being piloted through the pod process.
Senator Marshall: But the crux of it is, are you making progress? It sounds like, from what you’re saying, that if you consider progress, you don’t consider major progress. I think you still have problems. You still have a big problem that you’re not catching up.
Mr. Linklater: That’s true. We have fallen behind because of the pressures we have had around collective agreements, around dealing with overpayments to prepare for tax season this year. That said, we have built capacity. We have added additional staff to be able to work away at the backlog and on priority transactions. We are, through a series of measures, redesigning some key transactions we know are having an impact and the most pain-affected areas, if you will, on staff; the acting process, transfer in and transfer out terminations. We are looking at the technological, the business process and the cultural training issues that need to be addressed to streamline and simplify to keep more of that work out of the hands of compensation advisors.
Senator Marshall: You need to go back and look at your plan again. Based on what you’re saying, I was hoping that I would come here this morning and hear something that would instill a little bit of confidence, but I’m not hearing it.
Senator Pratte: Mr. Linklater, I am looking at the data that I think is the latest for November 29 to December 27 for financial transactions published on the website. I suppose that is for financial transactions dealt with by the call centre in Miramichi, is that it?
Mr. Linklater: That is correct.
Senator Pratte: So if I look at received transactions and processed transactions, I understand there is a huge backlog, which obviously you have trouble dealing with. There are 21 collective agreements signed, and obviously that’s added volume. However, I would expect with the new people that you have added working at the call centre that the number of financial transactions processed would increase from month to month because you have more people. That’s not what we’re seeing if I understand the data correctly.
For instance, in the last month for which data is available, you have 63,000, or on the website it is 53,000. On the excel sheet that I have it’s 63,000. So I don’t know if it’s 63,000 or 53,000. But anyway, it’s even less for many other months. I have difficulty understanding what is going on. I would expect a regular increase from month to month. What is going on?
Mr. Linklater: Essentially, we have been working through some of the key transactions, parental and disability, to make sure we’re meeting service standards.
As we get more and more into an individual’s file, particularly with collective agreement implementation, there are a number of complex transactions often associated with an individual. A termination, for example, would require the compensation advisor to do much more work on a file than for someone who has changed departments or has received a promotion.
With the pressure of collective agreement implementation and the associated workload, the fact that over the course of December — we did have the Christmas and new year break, which had an effect on attendance and productivity — that we did see a decline in that month.
We are looking at measures around training to help enhance productivity. The workload realignment taking place now — by bringing in additional staff to do more of the clerical work, to help the more experienced people focus on the more challenging and difficult transactions — is starting to show results in terms of improved productivity. My colleague would be able to add more.
Marc Lemieux, Assistant Deputy Minister of Pay Administration Branch, Public Services and Procurement Canada: I would add in December, because we wanted to ensure a smooth tax season for the employees, we identified 28,000 transactions that we had to do, so to ensure there was no overpayment that would appear on the T4 —
[Translation]
— Relevé 1. At that time, we created an additional 18,000 transactions, which would not normally have appeared in this summary, to make sure we were providing employees with the best possible service in preparation for the pay period.
As Mr. Linklater was saying, we are also focusing a lot of effort on reorganizing the work, both internally at the pay centre and in conjunction with departments. Our goal is to achieve increasingly better communication so that the requests that come to us arrive on time and are well-prepared, so we can process them quickly. That is the focus of what we call the POD pilot, a pilot project based on modules, and we are making progress as a result.
I would add that, in conjunction with all of these measures, departments and employees are conducting numerous consultations to ensure that all of our HR expertise is being leveraged to identify the best solutions as quickly as possible.
[English]
Senator Pratte: So I understand the statistics correctly, there is one other statistic that you use is financial transactions that exceed the normal.
[Translation]
In French, the wording is “excédant la charge de travail normale” —
[English]
— exceeding work load. What does that mean exactly? That number increases from month to month. What does that mean, the number of transactions that exceed the normal workload?
Mr. Linklater: Our analysis indicates that at a steady state, with transactions coming in a timely and accurate manner, that PSPC, the pay centre, would have capacity to process 80,000 transactions in any given month adjusting for seasonal changes and that sort of thing. What we have been reporting on publicly are those transactions above and beyond the 80,000 normal workload that are waiting to be processed at the pay centre.
Senator Pratte: Okay.
Finally, the other data you use is the percentage of transactions that are treated according to the standards of service. What are the standards of service? Is it timing? Is it the time it takes to process the transaction? Is that it?
Mr. Linklater: Yes, initially when the crisis hit, we had been reporting on transaction types against service standard. For example, with parental leave and disability leave, the service standard at the pay centre is the transaction will be processed within 20 working days. So for those two transactions, following engagement with the unions, we have dedicated the resources to meet consistently the service standard of 20 working days at the pay centre for those transactions.
Where we have variation relates to other transactions deemed of less priority or have shifted down our priority list because of collective agreement implementation or preparing for tax season.
Senator Pratte: My final question is about the people working in Miramichi. You have had difficulty retaining people there because the work conditions were very difficult. Are these problems solved? Are people who work there working in satisfactory conditions, and therefore are you retaining those people, so that you have a stable workforce there, and therefore people with experience who can do their work in a satisfactory manner?
Mr. Linklater: It’s not perfect, but the environment in Miramichi is much better than it was a year ago thanks to a number of efforts we have taken in collaboration with the union in particular. We have dedicated wellness resources to staff. We have brought in a consultant to do a pulse check, at the suggestion of the unions, to be able to monitor progress within the work environment over time; significant investment in training, which was one of the key concerns staff had raised with us.
All in all, I would say we are making significant progress to the point where through a recent hiring exercise, we had targeted bringing in 300 additional new staff in Miramichi in early January.
In fact, we were able to bring in about 325. There is an appetite for individuals in the region to seek employment and to work with us at Miramichi.
I’m not sure if Marc would like to add anything more.
Senator Eaton: Good morning, and thank you for coming. I’m sure this is a very painful exercise to sit here and have us question you, but it might be helpful to all of us.
We had the Auditor General last week, and he said right now they have a system that is not only producing more errors than the 40-year-old system that it replaced, but it is less efficient than the 40-year-old system. Are you still adding more departments or more employees to the system?
Mr. Linklater: At this point, no. There is a moratorium on on-boarding. You would have recently seen a decision not to bring forward civilian employees from the RCMP until such time as there is stability in the pay system.
Senator Eaton: That’s a very good thing. One of the questions I asked him last week was on the software. You said, Mr. Linklater, that IBM was not responsible.
Mr. Linklater: IBM was the system integrator using the PeopleSoft software from Oracle.
Senator Eaton: Was it because whoever dealt with the PeopleSoft software at the very beginning did not brief them well in terms of the complexity of the pay system that you have and need, or is it because they didn’t do it properly? I know it’s a repetitive question, but it’s helpful to know from the very beginning, because one of the things the Auditor General said was that there needed to be a bridge system because the PeopleSoft system doesn’t respond completely to your needs. Is that a fair thing to say?
Mr. Linklater: Yes. If I could take a step back, senator, and remind the committee the pay environment is very complex. There are 32 different HR systems that feed into Phoenix with the numerous interfaces with the private sector and the pension system, among others, that need to be calibrated.
The objective was to use off-the-shelf software that would be customized as appropriate to meet the government’s needs. With 80,000 different pay rules related to the collective-agreement environment that we have, the 32 different HR systems, the degree of customization was —
Senator Eaton: Underestimated.
Mr. Linklater: Underestimated. That’s a very good word. What we are doing through some of our root-cause analysis and working with partners, including IBM, is to look at what customizations could perhaps be undone or done in a different way that would improve the flow of data between systems and would help departments and agencies with timeliness and accuracy of the data they are putting into Phoenix through the HR system.
Senator Eaton: If you had to do it all over again, would you go with a customized system rather than one off the shelf?
Mr. Linklater: I’m not an IT expert, but I think, as Goss Gilroy indicated, project planning was significantly underestimated in this case. For any new project or a redo, first principles would be to ensure that there was the best alignment between HR and pay and to ensure the 32 HR systems be shrunk down to a minimum to ensure the flow of data could be more easily managed.
[Translation]
Senator Forest: Thank you for being here today. This is an extensive problem that is seriously affecting the Government of Canada’s primary resource: its employees. Although difficult to solve, this problem has to be fixed.
Something you said, Mr. Linklater, really surprised me. You said that, in 2008, the House of Commons standing committee decided to modernize the pay system, and, a year later, a deal was signed with IBM, in 2009.
Mr. Linklater: The contract with IBM was not signed until 2011.
Senator Forest: Did the government put out a request for proposals?
Mr. Linklater: Yes.
Senator Forest: You are saying that, further to the request for proposals, IBM, with its PeopleSoft World proposal, met all of the obligations in terms of contract specifications and vendor responsibilities.
Mr. Linklater: Under the contract, yes.
Senator Forest: Were suppliers subject to a test bed? Did you receive multiple bids?
Mr. Linklater: We actually consulted a number of companies, but IBM was the only one that met all of the contract requirements.
Senator Forest: It was the only company that was eligible. Then, six years go by as preparations are undertaken to accommodate the 200 specific programs and so on.
Mr. Linklater: Yes.
Senator Forest: When we met with the Auditor General, he told us that the first recommendation was to submit an action plan — phase 1 — for December 2017. Was that plan submitted?
Mr. Linklater: Yes, it is available on our website. We forwarded the plan to the committee through the clerk.
Senator Forest: The same applies to the main causes of the Phoenix pay system failures, which were supposed to be published in 2017. The second commitment was to submit, in December 2017, a report on the key root causes of the system failures.
Mr. Linklater: We had already started working with departments and agencies, as well as IBM, to identify the causes of the pay problems. The draft report, entitled Root Causes and Analysis, identified 29 issues, which are currently being incorporated into our action plan. For instance, we have set up working groups to establish a clear picture of the HR-to-pay process, in other words, acting appointments, terminations, and transfers in and out. We will publish the results of the report to keep the public informed of our work.
Senator Forest: My last question requires a more subjective assessment. In your efforts to fix the pay system, you have put the focus on transparency and accountability. In light of that, would you say the level of cooperation needed to fix this major problem is better than it was a few months ago, in other words, back in June 2017? I am referring to the level of cooperation from managers, employees, unions and so forth.
Mr. Linklater: Yes, in fact. Thanks to a strengthened governance model, we were able to bring together the departments and agencies with more complex issues. Through that structure, we are made aware of departments’ and agencies’ concerns. We are working with those leaders to examine the issues in depth and identify the best solutions. The level of cooperation from departments served by the pay centre is better than before. My colleague may have something to add in relation to the departments and agencies that are not served by the pay centre in Miramichi. They administer their own pay systems using Phoenix. The cooperative relationship between the two groups has significantly improved.
[English]
Senator Neufeld: Thank you all for being here today. I appreciate it.
Mr. Linklater, you said to a question from one of the senators that you are the person responsible for whatever has to happen here to get this straightened out. Maybe I just didn’t hear you, but how long have you been the person responsible?
Mr. Linklater: Since the end of June, senator.
Senator Neufeld: So you started the end of June. Who was responsible before you, or was there anyone?
Mr. Linklater: The Deputy Minister of Public Services and Procurement Marie Lemay was leading the response to Phoenix.
Senator Neufeld: From the beginning?
Mr. Linklater: From her arrival in the department, which was in April 2016.
Senator Neufeld: Who was in the position prior to that then?
Mr. Linklater: The deputy minister was George Da Pont.
Senator Neufeld: How long was he there as responsible?
Mr. Linklater: I think he was there a little over a year.
Senator Neufeld: So would that be from the beginning?
Mr. Linklater: No, the project was initiated in 2008, and as I indicated, we went forward to Treasury Board to get approval. François Guimont was the deputy at that time. He was followed by Michelle D’Auray, followed by Mr. Da Pont.
Senator Neufeld: I’ll go back to the record, then, to find out who has been responsible up to you in June.
I have some numbers from the Library of Parliament as of June 30. Errors that amount to $295 million was owed to government by 59,000 employees, and $228 million was owed to 51,000 employees by the government. When these 110,000 people receive their T4 slips, can you tell me if they will all be correct when they go to CRA? We also know that CRA is not the nicest place to have to go when you have a mistake.
How is that going to work out? Do you have a plan?
Mr. Linklater: We do have a plan.
Senator Cools: Oh, good.
Senator Neufeld: Because it’s going to be a “cluster,” I would say. I just wonder how that is going to work out for the employees, because those are who we are all concerned about.
Mr. Linklater: Absolutely. Thank you for the question. I would say Phoenix has been a project of firsts. Over the past year, we have been doing things for the first time. Tax season 2016 was the first time we had done it with Phoenix. Collective agreement, retro-calculations — the first time — and so on.
That said, we were able to learn from what we did last year with CRA to support tax season, and we have been working with them since the fall to update the materials available on the CRA and PSPC websites, et cetera, to ensure employees have the most information possible to help them with filing their taxes.
As Mr. Lemieux said, we had taken people off collective agreements to work on the overpayments that you have identified, to ensure, to the extent possible, the T4s they would have will be accurate and allow them to file their taxes for 2017 by April 30 with what I would call a “good T4” that reflects their actual income.
That said, there are a number of supports available. We have warm transfers between our call centre and the CRA call centre. The Treasury Board claims office is offering $200 in support to employees to help them with the preparation of their taxes. Our intent is to ensure that, by mid-March, employees have a T4 that is good and will allow them to file their taxes with minimal issues by the end of April.
Senator Neufeld: Do you have a plan in place to work with CRA? We know they are lousy at answering their phone calls; we have been told by the Auditor General just recently. In fact, they don’t answer most of them. When they do, much of the information is incorrect.
So what kind of a plan do you have to work between what you’re doing to try to solve the Phoenix pay system and the CRA themselves? Is there some plan that you can actually talk to someone at CRA, or do they have to make those half a dozen phone calls before someone will actually answer the phone?
Mr. Linklater: There is a plan. I’ll ask Mr. Lemieux to give you the details.
Mr. Lemieux: We have been working very closely with CRA since last year to ensure the tax season is as easy as possible for employees who face the issues with the system. As an example, CRA will reassess the tax for an employee when an amended T4 is issued. They won’t ask employees to fill their tax return again; they will do it automatically.
In collaboration with CRA, we also worked with Revenu Québec to ensure the people in Quebec will receive the same proactive service in addressing any of the issues. The websites of CRA and PSPC have also been coordinated to ensure the information is complementary. We talk about how we issue the T4 and what our schedule should be in issuing the T4. From there, CRA takes any questions from our employees.
As Mr. Linklater said, we also have an agreement with them such that when an employee calls the call centre with a question about their tax issues, if the issue is not with the T4 we have to produce, we have a warm transfer to CRA where they could talk to an employee at CRA directly.
There are a lot of extra measures, if I can say it like that, taken by CRA to ensure we serve our employees as best we can.
Senator Neufeld: I’m pleased to hear that.
I want to go on to the Miramichi pay centre. What is the rate of turnover at the centre for pay advisors or whatever you call the employees there who are trying to deal with this mess? What was it before you arrived, and what is it today?
Mr. Lemieux: Unfortunately, I don’t have the figures in terms of the rate of churn at the pay centre. Maybe we could come back to the committee —
Senator Neufeld: Actually, provide that to the clerk, and the clerk will provide it to us. I would like to know what it was when you arrived on the scene to take over this accident, and what it is today — how it has been reduced.
How many people have been hired over this period of time to fix this problem?
Mr. Lemieux: At first, in 2016, in the first few weeks of recognizing we had more than just a few issues, we created the satellite office. We have hired about 200 people in the satellite office to make sure we have increased the capacity to be able to process the transactions. We have also created the call centre, and at that time I think we had about 100 people who were taking calls from the employees to ensure we were able to register their concerns and issues with their pay.
Since then, we have continued to add capacity in the satellite office, the pay centre and call centre. Since the spring of 2017, we have added over 380 people in the network. Some of them came because of the clerk letter that invited people who wanted to join and help us. We were able to hire compensation advisors and have them join the satellite office or the pay centre. Most recently, we have added 325 people at the pay centre, in the Atlantic region in Charlottetown and at other offices we have over there.
Senator Neufeld: How many in total? My notes from the Library of Parliament tell me that 1,400 people have been added to help fix this problem. Is that correct?
Mr. Lemieux: Yes. At this time, the total we have is 1,400 people.
Senator Neufeld: 1,400?
Mr. Lemieux: Yes. At this point. When the pay centre was created, we had 550 people at the pay centre.
Senator Neufeld: So there are over 2,000 people, now, trying to fix this problem?
Mr. Lemieux: The 1,400 includes the 550 that were there at the beginning, so we added about 900 people.
Senator Neufeld: That’s a little bit different. I’d like that clarified, because the notes I got from the Library of Parliament say that 1,400 had been added after the problem started, from when the problem started until now. You’re saying that includes the initial 500 and some that were there to start with, so I need some clarification. If that takes you a little bit of time, I’m fine with that, but I just need to know how many have been added since the problem started.
That’s before your time, obviously, Mr. Linklater.
Mr. Linklater: Mr. Chair, we can provide a chart to the clerk.
Senator Neufeld: To demonstrate that, just so I can compare it to Library of Parliament numbers that they’ve provided to us. I just want to get the correct numbers is all I want to do.
I have one more question. That is: Has anybody, to your knowledge, received a bonus pay for trying to solve this problem?
Now, you may not know about previous, and you can clarify that for me, if you would. If you don’t know, could you find out whether some people have been receiving bonuses to try and fix this problem, and what level of pay are they in or who are they? Are they managers or are they people that are actually working in Miramichi trying to get it done as pay advisers?
Mr. Linklater: Mr. Chair, this question also came up at the Public Accounts Committee and Ms. Lemay, as deputy minister, was able to respond.
The awarding of performance pay is a decision of the deputy minister of the deputy head of the institution and Ms. Lemay did say clearly that for senior executives involved in the launch of Phoenix she would look at a review of the launch and weigh that among other factors in making a final decision on performance pay for 2015-16, which is when Phoenix went live.
Following that review, I can confirm that no senior executive associated with the launch of Phoenix received performance pay for their work on Phoenix.
Senator Andreychuk: Thank you for coming before us as well as the House of Commons.
I want to be clear that there was a plan from 2008 to change systems into a new modern system. Clearly, looking back, it was insufficient. It didn’t anticipate the problems, it didn’t understand the scope and the breadth of the changes.
The Auditor General hasn’t gone back that far. He says he’s going to in his next tranche. But it seems to me that it’s a problem that should not be repeated again, because not only is it a computer problem, it’s the way the government approaches change. We often put in a policy that is probably a good policy, but it’s always the devil in the details and the planning and the underestimation.
But I understood from previous testimony, and maybe I’m wrong, that there was at least a safeguard and the safeguard was that we do all this planning and then we would not implement the new plan and discard the old plan until we were sufficiently confident the system would work.
What were the tests leading up to that? How would the bureaucracy have tested it up to the deputy minister’s level that they have confidence in the system to proceed? Because it shut down the old system.
Secondly, how would the departments not know? You seem to say, off the hook, it’s 32 departments and it’s very complex and human resources, and of course we had collective agreements. But surely those are things that you’d be right off the bat understanding. You don’t have to be a computer expert. You don’t have to say, “What are we going to have to accomplish in the next 5 to 10 years?” Yes, you wouldn’t know what day the collective agreements might be signed and in what form, but at least that should have been in there.
I’m wondering why it was so underestimated, and secondly, who made the decision that it was capable of now being a workable system, and when would that have happened?
Mr. Linklater: Mr. Chair, the planning around Phoenix was robust, I would say, but underestimated a number of significant challenges the senator has pointed out in terms of system readiness. Not just the technology, but the government as a whole being prepared to shift from the previous pay system to Phoenix.
There was extensive testing in the lead-up to the launch in February 2016. In hindsight, should it have been more robust? Should departments have been engaged more clearly in the results of that training? I think the Goss Gilroy lessons learned would point to that as one of the failings and we’ll see where the Auditor General lands in terms of his report as well.
Functionality was descoped for reasons, I believe, to meet budget and timelines, but anything that was descoped, there were mitigation plans in place. I think, again, a failure, an underestimation of the accumulation of mitigation, if you will, that perhaps individual risks with mitigations could have been dealt with more successfully than was the case. But a step back to look at the cumulative impact of the risks, I think, is probably something in hindsight that those who were working on this would likely agree should have been done.
At this point, what I understand to be true is the testing was deemed to be adequate, departments were asked about their readiness and confirmed cautious willingness to move forward with the first wave. And the issues that arose after wave 1 in February were deemed to be not unusual for a transformation of this size. It was after —
Senator Andreychuk: February of which year?
Mr. Linklater: Of 2016.
It was after the second wave in April where the number of issues and the severity of issues that arose became clear: The system was not working as it was intended and that there were serious issues.
Senator Andreychuk: One thing that I didn’t touch on and you didn’t either is training. Where would you come to the conclusion that people within working a system were adequately trained to go into an entirely different system? How much training was put there? It always seems to me that when we change, we put some money in for training but never sufficiently. And then you talked about cutbacks.
Ms. Cléroux: Before the system was put online, there was a descoping of training. There was no training done of any of the 98 departments serviced by Phoenix.
We are now undertaking that training. We have put in place online training for all employees and managers. It’s been live since December 2017. The numbers as of last week, we had over 86,000 employees and managers who have taken it, and we will be delivering instructional training for all HR and compensation professionals across those 98 departments.
What’s important to remember is we have two thirds of the public service, of the departments and agencies that are served by the pay centre. One third is still doing its own compensation services. So the challenges that we’ve been talking with the pay centre are only one element of the equation we’re faced with because we have one third who are doing the work on their own. And, yes, they have kept their old approach to compensation and their experienced people.
This is a major difference between the two realities. But when we’re looking at the suite of issues with the compensation pay system, it is more than just the challenges of the pay centre.
The training that is now ongoing is to be able to inform all employees of the responsibilities, because there was a lot of change management that should have been dealt with prior to going live that was never done. So we’re doing it after the fact. It’s a deep cultural shift in public service where employees have to enter their transactions that lead to a pay transaction. So the HR change that leads to a pay action should be entered before it occurs or within a period of a few days after it has occurred.
This is a total shift to the culture of the public service. It is quite different. We have a lot of transactions that are very late entries. Some are six months after the fact, some years after the fact.
The training was an element that should have been put in place at the time, but it was descoped during the period of implementation of Phoenix. That’s why it’s happening now but with a lot of difficulties for employees to understand the challenges they are facing, the training. And that needs to happen concurrently. So we’re asking a lot of the employees at this time, but it’s happening now.
Mr. Linklater: To add to that, training materials were prepared and disseminated to departments and agencies. There was no oversight, however, across government around training takeup. It was not mandatory prior to Phoenix go-live, so there was a reliance on individual departments and agencies to ensure the change management had taken place and training was being taken. However, in hindsight we know the measures were insufficient and more could have and should have been done to manage this culture change.
Senator Andreychuk: Just a clarification, Mr. Linklater. In your first initial presentation — perhaps I didn’t understand it — you said you were going to be tackling ongoing pay and trying to get the income tax receipts and everything out.
Did I understand that all of the ones in the backlog are being held and are not being processed?
Mr. Linklater: No, work does continue. However we have put our most experienced compensation advisers on key priorities — collective agreement implementation and now overpayments. As the overpayments are dealt with in the next couple of weeks, we’ll resume the work on collective agreement implementation and that pulls in a number of transactions from the backlog as well, as we tie up the retroactive payments for affected staff.
Senator Andreychuk: So these compelling stories we see in the press and the people who contact us are talking about the fact that they’ve been waiting months and months, and it’s a stress situation. You say they’re not going to be a priority in what you’re doing?
Mr. Linklater: It is a stressful situation. I receive these queries and interventions from staff myself. What we have put in place, though, is recognizing we have limited resources for real hardship cases. We do have a triage process in place where we can escalate cases where there are medical issues, for example, where there is no pay, or where significant portions of pay have been missing for more than two pay periods. We escalate those cases very quickly and resolve them normally within a number of days. At least put the process in place for the pay to be corrected over the course of the following two or three pay periods.
Senator Andreychuk: CRA falls into your responsibilities also.
Mr. Linklater: The CRA has their own compensation advisers.
Senator Andreychuk: But they also have their own system.
Mr. Linklater: They do. They use SAP. They use Phoenix but SAP for their HR.
Ms. Cléroux: The challenge we always have when we explain this file is we have different types of HR systems. Depending on the type of system, the link to Phoenix is different. So we have five different types of interfaces with the pay system, independent of the pay centre.
So when we’re talking about CRA, they are a SAP HR system and they do not have an electronic link directly to Phoenix. They transfer information through what we call web services, which is a transfer of a file every pay period. So it’s a very different set-up than the departments on other types of HR systems, where information is transferred electronically between their HR system and Phoenix.
The fact is that we have 32 different HR systems serving 98 departments, so 98 different cultures, and then you have five different types of interfaces with the Phoenix system. It creates a bunch of the challenges we have to address to be able to find the right approach.
When we were talking about the training, it needs to be adapted to those realities because an employee in one department doesn’t have to — if you allow me — feed the same way as in another department, depending on the situation. This is part of the challenge: We have to be able to bring all of that to a better situation.
Senator Andreychuk: My question then should be back to CRA because I understand they are overloaded and they shut down their systems to receive email applications for taxes. It seems to me there are gaps and delays everywhere and no one has stood back and said, “What are we doing in this very complex world?”
Mr. Linklater: I’m not able to comment on CRA’s internal operations. I would like to underline that instructions have been sent to deputy ministers, heads of HR and chief financial officers repeatedly that staff who do find themselves in financial hardship can and should receive an emergency salary advance from their employing organization. Or if that doesn’t apply for a lack of pay but there are other financial issues, the departments can say issue priority payments.
The Chair: With this, honourable senators, the CRA has been requested to appear. I’ve been informed that they should be here, if confirmation applies, for next Tuesday.
Senator Andreychuk: We’ve talked about deputy. The minister now who would be in charge is Mr. Goodale?
Mr. Linklater: No, Minister Goodale chairs the working group of ministers. Minister Qualtrough is accountable for the pay system.
Senator Andreychuk: She is still. Thank you.
Senator Cools: I would like to thank the witnesses for coming before us today. I would also like to thank you for your forbearance of all these many months. To me, it is unfathomable that something could go off the rails so completely as the payment of salaries to employees. My heart goes out to all of you in a way because this is something that you have obviously found very irritating and extremely embarrassing.
So I want you to know that I’ve got a gentle ear for you. So be aware of that. The chairman knows my sentiments on this matter. I belong to that small group of people who believe that CRA should cease being an agency and go back to being a department of government as it used to be.
I think it was made an agency maybe 20 years ago. I think that bill might even have come to this committee. I don’t remember it then.
The real puzzle I have is how could this issue go so completely off the rails without somebody being in charge to take control totally? I was just making a joke that maybe we should have hired Bill Gates or someone like that. But how could something go off the rails so completely?
The Chair: Any comments, Ms. Cléroux and Mr. Linklater?
Mr. Linklater: I think the Goss Gilroy report and our own learning have really reinforced the notion that the pay modernization projects, the implementation of Phoenix, was one piece of a broader transformation of pay initiatives across government that did not have a clear accountability framework or strong governance in place to make linkages across the various initiatives.
In essence, it did not engage the community, the town, the unions or the private sector in the most effective way to make sure that concerns were heard early and addressed as the system was being built and implemented.
Ms. Cléroux: The secretariat asked that exact question. That’s why the report from the Goss Gilroy firm was commissioned, to have those lessons learned and inform future transformation, especially when we’re talking about initiatives that are government-wide. This is probably the main element to remember: The pay system was one of the first transformations government-wide. A lot of elements that have been identified, the 17 elements raised by Goss Gilroy, many are also overlapping with the Auditor General’s report. They are informing the future about those government-wide initiatives.
Senator Cools: Thank you very much, witnesses. There’s an element of tragedy to this whole thing. I have no doubt hundreds of employees have experienced all manner of hardships because they weren’t getting their pay on time.
I didn’t always know, but apparently most people live paycheque to paycheque. It isn’t everybody who has another small pack of money somewhere in the bank. So when something like that gets so totally derailed, it puts the fear of God into you. I still thank you for coming before us.
Senator Marshall: These are questions for Ms. Cléroux.
It relates to two items you mentioned in your opening remarks. When you talked about the cost of resolving the pay problems you said we will be able to determine costs incurred to date and put in place a framework to track future costs.
We always think Treasury Board has their fingers right on the dollars. Why wouldn’t that information be available now? That’s an issue that came up in this committee, it might have been with the Auditor General. Why wouldn’t that information be available now with regard to the costs of resolving the pay problems?
Ms. Cléroux: I will ask my colleague Tom to take this question, please.
Tom Scrimger, Assistant Comptroller General, Financial Management, Office of the Comptroller General, Treasury Board of Canada Secretariat: I think it depends on the perspective from which you want to examine the issue. We certainly are aware of the funding that’s been authorized to address the Phoenix issues and can describe that funding for you.
The project we have embarked on that responds to the Auditor General’s recommendation dealing with Treasury Board Secretariat is a much more comprehensive cost estimation project to look at a global picture of all costs in and around the Phoenix question. We are exploring three aspects.
One is historically the costs already invested into Phoenix and its implementation. The second area we are examining is the transitions to stabilization costs; what is the investment that’s likely to be required in order to stabilize Phoenix? The third area, which is one we approach with a great deal of caution because we don’t know all the answers yet, is what might the future cost of a solution be?
So the costing team who reports through to me is heavily engaged in this work with departments and agencies now. They’re going through a data-gathering exercise which will be followed by what they would call a data normalization exercise, or basically the check the quality of the data. Then we will have begun concurrently to build costing models to hopefully answer some of these questions and to report our results back through to ministers in the spring.
Senator Marshall: I’m interested in an estimate of what it’s going to cost to fix the problem in the future, but that wasn’t the basis of my question. My question is for the problems you’ve tried to address, the problems arising now with regard to Phoenix, for example, trying to resolve the half million outstanding pay issues. Can you put a dollar figure on that? I wasn’t looking at the costs of implementing the system. It’s the problems. You don’t have that number now, do you?
Mr. Scrimger: I can provide you with a global number of funding that’s been authorized around the Phoenix system.
Senator Marshall: Is it for the problems —
Mr. Scrimger: I will try to give you the three basic areas of the costing.
The original funding approvals that dealt with the consolidation of Miramichi and the Phoenix design and implementation was about $309 million. We also had monies transferred from departments into the Miramichi project of about $217 million.
Senator Marshall: What was that for?
Mr. Scrimger: That was actually transferring resources devoted inside departments to pay, and it was transferring because of the consolidation of pay for a number of organizations into their Miramichi centres. Departments had to move resources from the department to the Miramichi centre. I’m boiling things down to the essential here.
When it comes to funding that deals with the Phoenix issues funding, my colleagues in PSPC received a funding of about $50 million about two years ago — excuse me if I have the timing wrong. The departments were not required to bring to the centre about $210 million in savings that were supposed to be harvested through the Phoenix process. In 2017, up to $142 million was approved by ministers to address Phoenix implementation issues.
So if I very quickly do the math, there is approximately $400 million in funding that’s been approved to address the challenges that have come out since the implementation of Phoenix, almost evenly split between not harvesting savings from departments and new monies invested to address the Phoenix implementation issues.
Senator Marshall: Would departments have been allowed to transfer funding from other programs to cover resolving the problems in Phoenix?
Mr. Scrimger: I can’t answer how individual departments may have addressed their resourcing question.
Senator Marshall: The Treasury Board doesn’t track that, do they?
Mr. Scrimger: It would be within their operating vote which is a single vote. I would presume some departments may have reallocated funds to address Phoenix-related issues. Others may have had sufficient resources. It’s not a question I can give you a specific answer to.
Senator Marshall: If you’re going to do that exercise that Ms. Cléroux mentioned in her opening remarks, the exercise is going to be completed by May 2018, you should have that number then, shouldn’t you?
Mr. Scrimger: We’re hoping to have a good sense of what the change in departmental spending was before and after Phoenix as part of that exercise.
Senator Marshall: This is something I mentioned when I was asking questions earlier during the meeting.
Why do we continue to say, “we will, we will” and not “we are?” It always seems like we’re looking toward the future to do something. We will collaborate with departments to report and track things and then to better track and report on pay actions, and we will set up performance measures at some future point in time.
Why is it always “will”? Why wouldn’t some of it be done? Why couldn’t it be done now? Why isn’t it done now?
Mr. Linklater: A lot of the actions you refer to are ongoing. In fact, where we have been working with departments and agencies on something like performance indicators, for example, we realize our data sets are imperfect and we are measuring what we can measure, but there may be more precision that we can bring to the data to be able to provide better information back to departments and agencies.
So essentially we are collaborating, we are working with them. We are using the governance to be able to advance the initiatives, particularly the 22 measures that were announced in November. However, there’s always an element of refinement that comes to these things. The way we’ve drafted our documentation is to reflect that this is not a one-off, there is an ongoing need for us to collaborate across the town to be able to bring stability to the system.
Senator Marshall: Sometimes when we say “we will,” it should be “we are.”
Mr. Linklater: We are or we will continue to.
Senator Pratte: Going back to the numbers, Mr. Linklater, of the backlog of December 27, which was 367,000 financial transactions, can you provide a detailed picture of what these transactions are? How many are people who are underpaid or people who were overpaid? How many were maternal or parental leave or people who exited the public service?
Mr. Linklater: We would be able to break that down by sub-activity. We could do that and provide detail to the clerk of the committee.
Senator Pratte: Thank you. We would appreciate that.
I understand if we looked at that over time, there should be a change in the composition of those transactions. If you do your priorities right, we should find fewer people who are underpaid, for example, because you would have given priority to people who were getting no pay.
Mr. Linklater: Well, an example I would use reflects that logic, yes. When we went live we probably had a considerable number of people waiting for parental benefits or disability benefits, but because of the way we have prioritized the work in working with the unions, those numbers would be very low and very stable. So over time, you’re right, the priorities will shift depending on where we put the emphasis.
Senator Pratte: Thank you.
[Translation]
Ms. Cléroux, you said a change in culture is needed among the people in the departments who are responsible for pay and human resources, in the way they enter transactions. As I understand it, that is one of the main problems with the Phoenix system. I would like to hear more about this problem because it has been mentioned a number of times.
As I understand it, when an employee is promoted, there is a time lag between that event and the transaction being entered into the system. Typically, it could be entered anywhere from a few weeks to a few months later. Is that correct?
Ms. Cléroux: That is the problem exactly. According to the prevailing culture, practices and customs, human resources staff did the transactions, but there was no sense of urgency or need to enter the data into systems within a specific time frame. As a result, there is a long time lag from when the events occur until they are entered into the systems. Like it or not, for most of the existing human resources management systems, including compensation, not completing the transactions in a timely manner causes problems with regard to the system’s configuration.
In the past, when transactions were done manually, that was simply something the government lived with, year in year out. As these functions became automated, we failed to recognize that work habits also had to change. The way Phoenix is configured exacerbated the situation, and the number of pay transactions skyrocketed.
This explains many of the problems we have seen, and that is why we have to change the culture and processes. We use processes that were created when people did the work manually for the most part. Some of those functions were automated without examining whether that was the most efficient way of conducting a series of operations. All of that was exacerbated by the way Phoenix was designed.
Right now, we are working on redefining human resources processes, which we probably should have started doing when we were looking at implementing the Phoenix pay system.
Senator Pratte: So it is because the training was insufficient, or simply because you were not aware of the situation when Phoenix was implemented.
Ms. Cléroux: We underestimated it. We took it into consideration, and we can see that in looking at the original documents, but we thought these things would be easy to change. That is what Mr. Linklater was referring to when he said that documentation had been distributed to the departments and agencies. We thought that by telling people that they would have to enter pay transactions in a timely manner from then on, they would understand the scope of change. The changes required in work habits, customs and practices, and in the culture throughout the government, were seriously underestimated.
Senator Pratte: And the training exercise you have launched, on this last point specifically, how long will it take to complete?
Ms. Cléroux: The online training was launched in December 2017. About two fifths of staff have completed the training thus far. We are expecting it to take a few months. We have not yet set a deadline. We regularly encourage people to complete the training. Classroom training will be provided to answer the more complex questions that human resources and pay professionals may have. That will most likely take another year, given the volume and number of people to be trained. We are looking at possibly accelerating this kind of module by using technology to reach out a larger number of people and work in waves.
We are trying to get it done as quickly as possible because we know that we will be stuck in a vicious circle until this training has been completed. Until the training has been done, habits will not change, people will not recognize the issues, and the problems will keep accumulating. An investment is needed to break this cycle, and that is why we are doing what has to be done. Bear in mind, however, that there 300,000 public servants so, unfortunately, it will take more than a few weeks.
[English]
Senator Eaton: To follow up on Senator Pratte’s question and your answer, madam, I have here a report of the Office of the Comptroller General dated January 2016. In this report, they break things down by ministry, and I’ll just give you a couple. For instance, in the CSC, the shift worker issue tests with less than a 50 per cent success rate where shift worker represents 40 per cent of our workforce.
Under CRA, testing results are unknown. Every time PSPC finds an issue they fix it, but there does not seem to be a holistic approach to change.
At ESDC, system readiness is questionable. Out of 25 outstanding defects, 10 are still critical and not fixed.
Do you think you could provide for us an update on how each of the ministries is doing in terms of better results for each ministry? It would be nice to know, for instance, if they have gotten better. It would be most helpful for us if we could look at it by next year to know if ISED has gotten better and whether Agriculture and Corrections Canada have improved their rate of success in paying their workers.
My next question, madam, relates to where, in your speech, you said that in collaboration with PSPC, “We will establish standardized timelines for HR transactions that lead to a pay action by June 30, 2018”. Could you explain that? Thank you.
Ms. Cléroux: On the question of the data for each of the departments, we are publishing every two weeks what we call a departmental dashboard. We do it for the 45 departments serviced by the pay centre, as well as for the 53 that are not serviced by the pay centre.
Senator Eaton: There are 53 that are still not serviced?
Ms. Cléroux: Fifty-three of the 98 that are not serviced by the pay centre have kept their own approach to compensation services. However, when you’re looking at the total population, those 53 equal one third of the total population of the federal government. The pay centre, which is serving 45 departments, is two thirds of the population.
As you know, we have different sizes of departments and agencies. That’s why every time we use a number, we have got to add another one, otherwise it’s kind of skewing the understanding of the challenges.
Senator Eaton: Forty-five departments are using the Phoenix pay system.
Ms. Cléroux: Are using the pay centre. In total, we have 98 departments that are using the Phoenix pay system.
Senator Eaton: Thank you.
Ms. Cléroux: I’m sorry, it’s a lot of numbers, but that’s the challenge we’re dealing with.
We are doing those dashboards on the key HR transactions that lead to a pay action. We are estimating there are, on average, in the federal government about 100 different types of human resources transactions, but about 40 of these have a consequence on pay. We are focusing on a subset of those. It’s about 15, if I’m not mistaken, we are following more closely.
What we’re doing is using data coming from the pay centre for the departments serviced by the pay centre. For the departments not serviced by the pay centre, they do reporting to my team manually every pay period.
We do publish those dashboards, and we could share them. We have a cumulative dashboard for the pay and non-pay centres, so two different ones we can share with the clerk of this committee so that you have a sense of it.
This is, right now, the tool we are using to be able to follow the evolution of the situation with the different departments.
The 12 institution officers and agents of Parliament are not providing us with data. Those do not answer to the government. So apologies for that. It’s 85 that we are collecting data for, but only the organization above 50 FTEs. We have a total, if I’m not mistaken, of 70 organizations for which we publish the dashboards.
Each of those organizations, every pay period, receives their own. They see the cumulative data, and they do receive their own data of that pay period. People inside of those organizations can really look at the challenges and issues.
When we began the exercise in June, we were hoping we could rapidly identify some avenues of resolution so we could focus efforts. To this date, we see the difference between pay centre and non-pay centre. We do see similitude in certain types of transactions, which is leading us to suspect and look into the root causes more in the design of the system than in the manual work done by everybody.
We are expecting challenges in the transfer of data between systems. I told you about 32 HR systems and five different types of interfaces. Some are direct transfer of data. We are suspecting that work is under way. Unfortunately, none of that is easy to do, and that’s why there is still perspective in our words. We are working on it, but it’s not rapid to be able to find out because we have a lot of things that have been done for which no documentation is available. It’s a bit like finding the needle in a haystack to be able to find the source of the challenges.
This is to answer your first question. You then asked the question: What do we mean by the service standards on the HR processes?
Les and Marc told you about the service standards that exist for the work at the pay centre. No equivalent service standards exist for the upstream part of the work done by the HR teams. This is not something we have ever implemented in government. Up to the mid-2000s, all of the work for the human resources management was done by each organization, and there were a lot of different approaches. Since 2005 or thereabouts, work has begun to do things more similarly across government, but we have not yet done the work. It was not done prior to the design of Phoenix. It was not done when Phoenix went live, and we’re starting now.
To answer the other senator’s question about the will compared to the now, all of that work needs to be done. We have to do that work in collaboration with departments and agencies, mindful of the change management that will need to happen. We have all been burned with the fact that change management was not taken to the degree it should have been taken with the implementation of Phoenix. We want to ensure that as we undertake the stabilization of work, this time we will do it mindful of all the components that have to be included so we are not repeating the errors of the past.
We are doing all we can not to repeat the mistakes. We may be a bit slower at getting at it, but we’re doing it in not only an integrated but collaborative manner so that whatever we are going to implement, it’s going to be something more sustainable and leading to the correct change, rather than just doing a check of a list of actions we have to take on.
[Translation]
Senator Forest: You talked about the challenge of training and the fact that two fifths of the public servants involved have done the training. Do you motivate public servants to encourage their team to take the training so that people can pick up the slack on the ground?
You are also working with union leaders. Are they aware of the need to motivate their members? Two fifths are 40 per cent all the same, a significant number, but the remaining 60 per cent still have to follow through on your effort on the ground.
Ms. Cléroux: The answer is yes. We are working with all departments and agencies. Training coordinators for stabilization have been appointed in all organizations. There are teleconferences with those people every week to get the word out. The discussions are led by governance and the public service management advisory committee, which includes about fifty deputy ministers. It is an information sharing and dissemination committee. Those meetings are every three weeks and provide an update on training.
We work with all public service unions. We have committees with them. Before we go ahead with the online training, they can have a look at the modules and provide comments. A number of them have posted information on their website pertaining to the training web page. We are trying to get the information out to as many people as possible.
Senator Forest: The Auditor General’s report of June 30, 2017 noted that there were 494,534 outstanding pay requests, 52 per cent of which were high impact, that is, with a value of over $100.
To measure the impact of your efforts thus far, do you have statistics on the number of pay requests that are pending as of January 1, six months later?
Mr. Linklater: We posted details on the dashboard which we have already discussed with Senator Pratte. At that time, there were about 450,000 outstanding transactions with a financial impact. That includes all of our regular workload, and everything above and beyond that. We plan to release another dashboard for January in the coming days. That table will show the progress we have made.
Senator Forest: The tax season is approaching. The government has set a deadline for public servants because, of the half million individuals who made change requests, there are some overpayments and some underpayments. People who were overpaid were given a timeframe to contact the Canada Revenue Agency, but it seems to be very difficult to get through. People are trying to contact the CRA by telephone to report their request and to resolve their situation so as not to be penalized, but they are not able to get through. Has this problem been resolved?
Mr. Lemieux: Yes. For the people who were overpaid, we had already put a plan in place, together with the Treasury Board Secretariat and the CRA, which enabled us to identify a series of transactions that could lead to overpayment. The overpayments that were reported by the Auditor General were identified once the transaction had been completed and the amount of the overpayment had been determined. As Mr. Linklater said, in order to issue a T4 or relevé 1, we have to complete the transaction and determine the amount of overpayment.
In December, we had already started working on a series of transactions. In order to help all employees who thought they had been overpaid, we asked them to report it to us as quickly as possible, in December and in January. It was a transaction that we had to complete quickly. The employees were not supposed to contact the CRA to report an overpayment, however, but our call centres.
We created a team of 200 people to do this, and we expect to be able to issue either an original T4 near the end of February or an amended T4 by mid-March or early April so all employees have a valid T4 or relevé 1. Yes, we had some technical problems with calls, but we continue to answer those calls and do what we can to make sure that all employees get an amended T4 so they can file their taxes before the end of April.
[English]
Senator Neufeld: A lot of questions have been asked about the training part, so I will hopefully ask just one question.
I listened, I think, carefully to the explanation that people didn’t think it was a big deal to change the pay system for 300,000 people in government. It started in 2008 and went all the way to 2015 before it was purchased, put into place and tendered out. And to change the whole pay system for that many people and also understanding the same company that was doing it in Canada had done it in Australia where there were problems. Everybody thought there was no need to train. I can’t for the life of me figure that out. Something that big, that, “Well, we didn’t think training was going to be a big issue and we are just starting to do it now,” after experiencing some of these disastrous things that are going on.
Who in the world decided that no training was needed to change a system this large in government? Who made the decision that, “Well, this is pretty easy to do. It will just be a transfer of a bit of information and whatnot, and Bob’s your uncle and I can go home”? Who does those kinds of things?
It’s a huge thing. I heard you folks saying, “Well, we weren’t focused on training, but we’re getting trained now and we haven’t even trained everybody yet.” You have a great big problem on your hands. Somebody must have made the decision somewhere that “We’re not going to train anybody. We’re just going to go into this new system and it’s a piece of cake. It’s like going downtown and buying a quart of milk.” I can’t really understand that, especially with government.
Mr. Linklater: Mr. Chair, as I explained, training materials were available and provided to departments, but as Ms. Cléroux underlined, there was no centralized oversight —
Senator Neufeld: But somebody made that decision that we’ll just provide the information, and if you want to look at it, look at it. If you don’t want to look at it, you don’t have to, but it’s going to affect you dramatically. Who decided that we would just send this out to all the departments, but there is no need to actually have a look at it? Don’t get excited about it. This is easy. Somebody had to make that decision. Who was it?
The Chair: Will you provide the information on that?
Mr. Linklater: I believe it would have been the project team as they looked at the scope and pace of developing the system. Change management was descoped from the original proposal on the expectation that departments and agencies would have the responsibility to make sure their files were clean before they were transferred to PSPC, their staff were trained, and they would actively participate in the change agent network that had been set to track these issues.
Senator Neufeld: Who was that project team that made that decision? Can you provide that information and give us that information, please?
Mr. Linklater: It would have been the senior executives at Public Services and Procurement.
The Chair: Before we close, I have three questions. You can either say yes or no or provide it in writing.
Number one, will the Phoenix pay system realize its intended efficiencies?
Number two, looking at the AG report and the number of employees affected, what is the real number of employees affected now in the Phoenix pay system across Canada?
Number three, as we have learned and we’re getting information about hardship and stress to our employees, is there provision for a compensation package to relieve hardship to our employees?
Mr. Linklater: In terms of intended efficiencies, I think it’s clear that the savings proposed as part of the original business case will not be realized and there will be additional costs involved in stabilizing the system.
We can provide you with the number of employees who are affected by the system. That information is available.
The Chair: What about a compensation package?
Ms. Cléroux: I’ll answer the last two questions. As of 24 January 2018, we have 128,600 serviced by the pay centre, 25,000 non-serviced by the pay centre. So a total of employees on that date of 153,600 people.
The Chair: Thank you, madam.
Ms. Cléroux: As for hardship and stress, different unions have raised these elements because of the number of people affected by Phoenix. There is a subcommittee discussing potential damages. Those conversations are ongoing, and we will see where the conversations will conclude.
The Chair: Thank you very much. Thank you to the witnesses and honourable senators. I now declare the meeting adjourned.
(The committee adjourned.)