Proceedings of the Standing Senate Committee on
National Finance
Issue No. 59 - Evidence - February 7, 2018
OTTAWA, Wednesday, February 7, 2018
The Standing Senate Committee on National Finance met this day at 6:47 p.m. to study 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.
[English]
The Chair: I welcome you to this meeting of the Standing Senate Committee on National Finance. My name is Percy Mockler, senator from New Brunswick and chair of the committee. I wish to welcome all of those 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 would now like to ask the senators to introduce themselves.
Senator Pratte: Good evening. André Pratte from Quebec.
[English]
Senator Black: Doug Black from Alberta.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Eaton: Thank you for coming. Nicky Eaton, Ontario.
[Translation]
Senator Forest: Good evening. Éric Forest from the Gulf region of Quebec.
[English]
Senator Neufeld: Richard Neufeld, British Columbia.
The Chair: Also, I would like to recognize Shaila Anwar, our clerk for the time being. Gaëtane Lemay, our regular clerk, is not present this evening because of illness. I will also recognize our two analysts, Sylvain Fleury and Alex Smith, who team up to support the work of this committee.
Today we continue our study of the Phoenix pay system, its problems and challenges. Last week, we received the Auditor General at the committee, and he painted a grim picture of the situation and encouraged us to go deeper in our study.
Yesterday we had before us the two central departments responsible for Phoenix: Public Services and Procurement Canada and Treasury Board. We wanted to know what the current situation is and what they are planning to do to fix the problem and find a permanent solution for our employees, the civil servants of Canada. This evening, through their main unions, we want to hear from the federal employees who are impacted.
Thank you, each and every one of you, for being here this evening and for sharing with us your recommendations, views and comments in order to find a solution for the public servants of Canada.
First, from the Canadian Association of Professional Employees, we welcome Mr. Greg Phillips, National President.
[Translation]
We also have with us Mr. Claude Vézina, Executive Director.
[English]
Then we have, from the Public Service Alliance of Canada, Mr. Chris Aylward, National Executive Vice President.
[Translation]
As well as Ms. Heather Finn, Special Projects Officer for Phoenix.
[English]
Finally, from the Professional Institute of the Public Service of Canada, we welcome Mr. Stéphane Aubry, Vice President; and Ms. Emily Watkins, Senior Advisor to the President.
Thank you again on behalf of the committee for being here this evening.
I have been informed that Mr. Phillips will deliver the first opening remarks, then Mr. Aylward will follow for the alliance, and finally, Mr. Aubry will speak for the institute. As usual, to the witnesses, following your presentation, questions will be asked by the senators.
At this point I will ask Mr. Phillips to make his presentation. The floor is yours, sir.
[Translation]
Greg Phillips, National President, Canadian Association of Professional Employees: Honourable senators, we would like to thank members of this committee for inviting us to appear so that we might voice our concerns in regard to the Phoenix pay system. My name is Greg Phillips, and I am the president of the Canadian Association of Professional Employees. CAPE represents some 14,000 public service employees. The vast majority of our members are economists and social science workers who advise the government on public policy. We also represent the translators and interpreters, who work every day to preserve and promote our nation’s linguistic duality. Last but not least, we also have the great honour of representing the 90 analysts and research assistants employed by the Library of Parliament.
[English]
Accompanying me today is Claude Vézina, our executive director, who manages employees responsible for helping members experiencing pay problems.
It has been two years since a shocking number of public service employees started being underpaid or experiencing other errors in the calculation of their pay — two years of fear, dread and uncertainty. And even for those fortunate enough not to be plagued with any pay issue, the very scale of the problem meant that for two years they have worried about becoming Phoenix’s next victim.
I would like to speak about the impact this has had on the public service and more broadly on Canadians. But before I do that, I would be remiss if I didn’t underscore the degree to which our nation’s public servants are dedicated to the work that they do for Canada and Canadians. Despite going months without getting paid accurately, our members have nonetheless kept showing up to work and have remained unwavering in their commitment to deliver the services Canadians expect, which has allowed our government to function rather than experience a national crisis.
I do hope that our leaders never forget the extent to which our nation’s public servants demonstrated professionalism and dedication in these trying times.
But while it was largely business as usual across the public service, what public servants were experiencing was anything but normal. For example, one of our members was on long-term disability following an accident, trying her best to recover and return to work. During her five months of leave, her pay was sporadic. For her first two months back at work she received no pay. Over the following eight months, her pay resumed, but amounts were inconsistent.
Sudden lump-sum payments are taxed at higher rates. She again experienced the horror of periods without pay. She requested a revised T4 but didn’t get one, and then had to overpay on her taxes. Throughout all of this, she was being hassled about overpayments. This is an absolute nightmare for anyone, let alone someone returning to work after a serious injury.
Another one of our members also experienced a nightmare of his own during what ought to have been one of the most special times of his life, the birth of his child. First, he had problems even getting a record of employment. Then, while on leave, he reported being overpaid. As a result, he went entire pay periods without getting paid. Five months after going on parental leave, this member finally received all the necessary documents.
Shockingly, while this member was trying to obtain emergency salary advances, he was also being asked to refund overpayments. This member spent his baby’s first 15 months trying to fix the resulting financial mess.
As these examples demonstrate, one of the worst impacts of Phoenix is the disproportionate and discriminatory impact that it has had on vulnerable Canadians, such as those with disabilities or new parents.
In addition, CAPE has heard from hundreds of members seeking assistance from their union on Phoenix-related issues. To date, in light of ongoing violations of members’ rights, we have filed close to 50 formal individual grievances, as well as six policy grievances. We also have hundreds of cases we are trying to resolve through informal channels, and thousands of members attempting to address their issues on their own.
Since the Government of Canada is the nation’s largest employer, this nightmare also impacts the broader public. Canadians, too, have been hurt by Phoenix. Public servants have scaled back their charitable donations. Fundraising totals from the Government of Canada’s charitable workplace campaign have declined since 2016. As a result, the organizations that care for the most vulnerable segments of our society are also hurting because of Phoenix.
Our members’ financial insecurity has also become a broader economic issue. It can be argued that when federal public servants are not paid or not paid what they should be, it can be disruptive to the broader economy and to local economies that are dependent on public servants supporting small businesses. According to our analysis, assuming $250 million in wages is owed to federal public servants, the following would be the induced economic impact in Canada: $68 million in wages and salaries outside of the public service; $176.5 million in GDP; and 1,875 jobs.
We can reasonably estimate the amount of money owed to our members; however, it’s not possible to calculate the millions of dollars unaffected employees are holding back on spending for fear that they might suddenly find themselves “phoenixed.”
Finally, we often speak of the stress caused by the Phoenix pay problems, but we too often think of these issues as if they occur in a silo. As we speak, countless Canadians are grappling with some very difficult life situations. The death of a loved one, marital difficulties or facing a personal illness or injury are some examples. Our members have similarly experienced these same stress-inducing life changes, only they have had the added stress of not knowing when their next paycheque will come, compounding their worries and anxiety. Sadly, life doesn’t take a break just because your employer can’t pay you on time.
Many of our members have told us that their mental well-being has been adversely impacted by their pay problems. The impact on their mental health is a serious issue.
We call on the government to make our members whole. To make whole, from a legal point of view, simply means ensuring that an aggrieved party is compensated for any sustained loss and isn’t any worse off than they otherwise would have been. The utter chaos that our members have been subjected to over the past two years is going to take a lot of work, empathy and dedication to resolve, to truly make these dedicated public servants whole, financially and emotionally.
Throughout this saga, public servants have been steadfast. They keep showing up to work despite not getting paid correctly and continue to deliver world-class services to Canadians. Likewise, they expect their leaders to show up with the same level of determination and commitment, to treat this issue with the urgency and seriousness it deserves.
Thank you.
The Chair: Thank you.
Mr. Aylward, please.
Chris Aylward, National Executive Vice President, Public Service Alliance of Canada: Thank you for inviting the PSAC to appear before you this evening.
The Public Service Alliance of Canada is the largest federal public sector union, representing over 130,000 federal government employees, including the workers at the Miramichi Pay Centre.
Over the past two years, the majority of our membership have had their pay affected by Phoenix. This month marks the second anniversary of the launch of the Phoenix pay system.
Our union has been fighting at every level — from our shop stewards to the national executive office — to both help our members and to hold the employer to account for this mess.
The ongoing pay problems have caused considerable financial hardship and stress for our members. As you are aware, Phoenix has caused a litany of problems. Many workers have been underpaid, while others have mistakenly received overpayments. Even those who haven’t had any pay issues live in fear that they will be the next victim of this nightmare.
I could speak for hours about individual horror stories and the work the PSAC has done on behalf of our members, but given my limited time, I will be focusing on two key demands that the PSAC has of this government. One addresses part of the long-term solution for the federal public service payroll, and the other deals with a pressing issue and seeks to alleviate a hardship some of our members are facing.
Pay “modernization” for the federal public service not only included the introduction of a new software program, known as Phoenix, it also consolidated the administration of pay for over 45 departments and agencies.
In 2011, the then-Conservative government announced this consolidation would mean the elimination of at least 1,000 experienced compensation adviser positions. At the time, PSAC said laying off these compensation advisers was going to be disastrous — and sadly, this has proven to be correct.
The independent, third-party report on Phoenix by the firm Goss Gilroy, which was released in September 2017, states that there was “a serious underestimation of the necessary role of the compensation advisors in ensuring employees are paid accurately and on time.”
In his fall 2017 report, the Auditor General went further, saying “that the decision to lay off the compensation advisors made it even more difficult to fix problems once the rollout began.”
Prior to Phoenix, when employees had problems with their pay, they were able to speak with compensation advisers. Now, because of the reduction in staff, coupled with the technological problems of the new system, compensation advisers are no longer available to do this. Employees must contact a call centre, which is staffed with temporary workers who know little about the federal public service payroll and are not able to answer any specific questions.
This is incredibly frustrating for our members. They must attempt to work out for themselves what monetary compensation they should be getting in order to know if they are being paid correctly. This is a tremendous burden. The federal public service has a very complex pay system with over 80,000 pay rules, and to expect each individual to calculate their own pay is both unreasonable and unfair.
PSAC believes it is clear that both achieving and maintaining a “steady state” will require more compensation advisers. Our union was able to negotiate with the government a recruitment and retention package for these workers. However, this agreement will only be useful if the government follows through with a robust and properly resourced process for hiring and training compensation advisers.
The government must also recognize that this cannot just be a temporary fix. For the pay system to work in the long term, a permanent team of well-trained compensation advisers in both the departments and the pay centre is required.
We know this cannot happen overnight, but we can start now. To do that, we need both a strong commitment and a clear plan from this government.
The second issue I will address is overpayments. An overpayment may be very obvious, such as discovering a much larger sum of money than usual in your bank account. But other overpayments are less obvious — small amounts over a number of paycheques.
Many of our members have reported that they have attempted to repay the government the money they received in error, but the government did not have the capacity to reconcile these payments. Therefore, often despite their best efforts, these employees were unable to deal with their overpayments before the end of the year.
The problem with overpayments is that when they are not addressed within the same calendar year, an employee is responsible to repay the gross amount, which they never actually received. This is done with the expectation that the employees will receive the difference between the net amount and the gross amount in the processing of their income tax returns.
PSAC has repeatedly raised concerns regarding the inequity of requiring these employees to repay more than they received, as well as the likelihood that many cases will not be resolved with an income tax return.
In response to these concerns, in December 2017 the government announced they would extend the deadline to report an overpayment to January 19, 2018. According to the government, those who reported their overpayment by January 19, 2018, only needed to refund the net amount.
However, this extension fails to fully address the problem because not all affected employees who tried to contact the call centres to report their overpayment were able to get through. For those who did report, we are concerned their pertinent information was not effectively recorded. We have reason to believe the employer will not be able to process all these changes in time to produce accurate T4s, leaving possibly thousands of workers who did everything right having to repay the gross amount. There are likely employees who are unaware that they were overpaid so did not even know they had anything to report.
For these reasons, a complete exemption through a remission order is the only way forward. A remission order, which is an option provided through subsection 23(2) of the Financial Administration Act, would in effect provide these workers an exemption from repaying the gross amount, which is more money than they received, and only require them to reimburse the net amount, which is the amount they actually received.
Federal public sector workers deserve to be paid correctly and on time, every time, for the work they do. Until this happens, the federal government should be doing everything they can to alleviate the hardships created by the Phoenix nightmare.
I thank the committee for inviting PSAC to speak, and I’m happy to take any questions you may have.
The Chair: Thank you, Mr. Aylward.
Stéphane Aubry, Vice President, Professional Institute of the Public Service of Canada: My name is Stéphane Aubry. I’m National Vice President at the Professional Institute of the Public Service of Canada. I am joined here by Emily Watkins, senior advisor to the president, who will also answer questions if needed.
The institute represents about 55,000 public sector professionals across Canada, most of them employed by the federal government. Our members make vital contributions to Canada and Canadians every day.
The institute represents computer specialists, scientists, researchers, nurses, tax auditors and a host of other professionals. Our members are showing up to work even though they are being paid incorrectly. Why? Because they are dedicated public servants.
For the last two years, they have been subjected to a pay system that is unable to pay them properly, on time or correctly. Our members have received zero paycheques, spent their parental leaves without benefits and pensions sometimes due to glitches in the system. They are frustrated and angry and simply cannot understand how this has gone on for so long without a concrete timeline for a fix.
[Translation]
We want to thank the committee for inviting us here today to share our comments on the Phoenix pay system.
The Phoenix fiasco is causing untold stress and harm to federal employees who are having trouble paying their bills and making their rent and mortgage payments, for example. Their families are also suffering because of this situation, which is even causing some to seek work elsewhere. Our position is as follows: like all Canadians, our members deserve to be paid correctly and on time. In order for that to happen, public service employees must get the help they need to solve their pay problems now.
It is equally important that the government ask its 13,000 IT professionals to develop a pay system that works and that would be better, cheaper, and more reliable than the Phoenix system. Because of Phoenix, the government has to manage the dysfunctional behaviour of the current system, while giving some indication that it may urgently seek a replacement. This general dysfunction should not become the norm while we wait for the system to stabilize, as we have been promised for so long.
Phoenix is fundamentally unfixable. It is a failure. The Phoenix crisis has been going on for too long. Our members deserve a better pay system. It is time to scrap Phoenix, because it is not working. We need to stop throwing good money after bad. We need a new system that is designed and implemented by federal IT professionals. A reliable pay system is essential to the success of Canada’s public service, its employees, and the public they serve. No private company like IBM is capable of delivering such a system. Private contractors do not have the necessary knowledge or expertise about the federal government’s pay process. This knowledge exists and should remain within the public service, where it can be used to build a high-quality system that works over the long term.
[English]
Outsourcing is no way to deliver government services. The government only needs to look at a few recent, major IT projects to realize the scope of the problems that outsourcing is causing. Spending alone on external professional and other services continues to grow despite the government’s commitment to reduce it.
In 2014, the federal government spent approximately $9 billion on professional services and other services. In 2018, we expect that this number will rise up to $12 billion.
[Translation]
Even though it has 13,000 IT professionals on staff, the government entrusted the development of the new pay system to IBM, despite the failure of the pay system that the company had developed for another government, and even in another U.S. state.
Instead, the government should give our members a bigger role and give them the opportunity to design and develop a pay system that will still work decades from now. Our members did it before, and they can do it again. The old pay system, which worked flawlessly for 40 years, is the proof.
We know it is hard to abandon a system that cost so much and has such a great image, as we can see right now, but the government needs to find the courage to do the right thing. It needs to cut its losses and start building a new pay system in collaboration with its own IT professionals. Current projections on when the pay system will reach the so-called “steady state,” which is expected to take until the spring of 2019, only prolong the agony for our members and for Canadian taxpayers.
Another issue I want to raise today is overpayments caused by Phoenix. If the overpayment is not addressed within the same year, the government forces the employee to pay back more than they owe by demanding that they repay the gross amount, which they never actually received. The employee is supposed to receive the difference between the net amount and gross amount in a future tax return, but in the meantime they are asked to absorb the difference. We object to the inequity of requiring employees to repay more than they received. We are concerned about the likelihood that many cases will not be resolved with a tax return. While the government has taken some steps to address this, its efforts fall substantially short of what is needed to protect our members from undue financial burdens stemming from a problem they did not create. We therefore ask that the government grant a remission order to exempt employees who have received overpayments from repaying the gross amount and only require them to pay the net — the same amount they actually received.
The last thing I want to talk about is damages for public service employees affected by the system. It is imperative that the government provide damages and interest to make our members whole, above and beyond the current claims process for out-of-pocket expenses. Phoenix has caused them many hardships, including untold stress and the time spent dealing with their pay problems, with very little success. Thanks to Phoenix, our members no longer have any confidence in the pay process. Every pay period, they worry they will get an unwelcome surprise. We ask the government to accept that it owes its employees compensation for the suffering they have endured and continue to face.
Thank you again for giving us the opportunity to speak with you. Please let us know if you have any questions.
[English]
The Chair: The first questioner will be Senator Eaton.
Senator Eaton: You say that the government used a system that had been used in another country. So from the very beginning, they didn’t start at the bottom and program the software properly to meet the very complicated needs of all of your members?
Mr. Aubry: The software that we call “Phoenix” is based on a shell called PeopleSoft. It was personalized by IBM to supposedly meet the needs of the pay system that was required to cover all of our collective agreement.
Senator Eaton: Did they go in and look at all your needs? Do any of you know how far they went in and how judicious they were?
Mr. Aubry: Based on the previous documents that were presented, there was an analysis of the requirements, what was needed, and then they did the engineering to figure out where the piece goes. Eventually, IBM was contracted to develop the personalization of the 80,000 rules into the system.
Yesterday, Mr. Les Linklater mentioned that some requirements were removed from the system when they were developing it to be able to meet the financial criteria. They were later added.
That mix of adding requirements that should have been first put into the system and patching over what was already built ended up causing more trouble because the new stuff over the old stuff didn’t work properly.
[Translation]
Senator Eaton: I believe you said at one point that it would have been better if public servants had built the system from the beginning.
Mr. Aubry: The old system was developed by public servants who specialized in IT and software development.
Senator Eaton: Did they work for the government?
Mr. Aubry: Yes. They were scattered throughout the departments to perform maintenance on that system, but they had the necessary expertise. The government decided to outsource and gave IBM a contract instead, but we already had that expertise within the government, and it could have been relied upon entirely to develop the system. It is regrettable that this expertise was not leveraged.
Senator Eaton: Did they give a reason for that?
Mr. Aubry: Not really. Sometimes there is a tendency to outsource certain projects instead of relying on in-house expertise. Do the vendors of these products exert a lot of pressure and insist that their product would be better and cheaper? At the end of the day, when we look at experiences with subcontracting, these firms just want to get a foot in the door so they can get paid for maintenance costs.
[English]
Mr. Aylward: Senator Eaton’s initial question about whether or not they went far enough after that initial look, that’s the crux of the problem. There was no due diligence done.
Senator Eaton: The AG, when he came here, said they had to bridge it. Obviously they did not. Then Mr. Linklater, at the last Finance Committee meeting we were at — correct me, please, colleagues — sort of said they had to fix it, but he didn’t say it was right. So it’s kind of hard to gauge.
Mr. Aylward: The issue is, when you look at a system that is required to handle 80,000 different pay rules for 300,000 employees in the federal public sector, obviously more due diligence was needed by the then-Public Works and Government Services Canada. That due diligence as to whether this system is going to be able to handle 80,000 pay rules simply wasn’t done.
Even our workers at Miramichi at the time, before it was rolled out, said, “This is not ready; this is not going to work.” Officials at Public Works and Government Services again at the time simply said, “Yes, it will. We believe that it will work.” Our workers at Miramichi were right.
Senator Eaton: They weren’t trained either?
Mr. Aylward: The training went from two years of training to be a compensation adviser down to one year. Now it’s down to three months. How can you tell me that doing a job four years ago, it took you two years to be trained, and now it only takes you three months to be trained to do the same job on a system that doesn’t work?
The Chair: Mr. Phillips, do you want to add to that?
Mr. Phillips: I think my colleagues have addressed it.
Senator Black: Let me start by not only thanking you all for being here today but, through you, to thank your members for putting up with what you’ve had to put up with over the last period of time on behalf of Canadians.
You’ve all made the point that despite these frustrations and real hardships for many of your members, your members have shown up to work. Certainly we see it here in the Senate. We cannot function without your members assisting us day over day. So I want you to know that we appreciate this and we are disappointed that you’ve been put in this position. We’re beyond — at least I am beyond disappointed.
When you check the definition of “phoenix” in the dictionary, which I’ve done, I’ll tell you, it’s a thing regarded as uniquely remarkable in some respect. Well, I have other language than that. I think this is shocking, disappointing and embarrassing. It is not what you’d expect in a First World country. You’ve got an ally here, because I find it infuriating and insulting. So that’s that.
Do we wish it were better? Do we wish we could snap our fingers and change it today? Of course we do, but we all know we can’t.
So what I want to know is are your members who are being impacted, are their needs being met? If not, tell us what we need to do about that.
Mr. Aylward: Thank you, senator, for the question, and thank you for your comments towards our members.
The simple answer to your question is no. The needs of the members, the employees —
Senator Black: Tell us what to do, then.
Mr. Aylward: Absolutely. As I said in my opening statement, there are a number of initiatives that this government needs to take. First of all, they need to be committed to hiring more compensation advisers, and that commitment simply doesn’t seem to be there. In an honest and straightforward way, we basically said we need more compensation advisers, not only in Miramichi or the satellite offices, but we need to put the pay advisers back into the departments and agencies so they can address the individual issues. Then, as far as if employees are reporting issues and those issues are not being addressed, then obviously their needs are not being addressed.
When somebody says all you have to do is request an emergency salary advance, then you get your emergency salary advance, and in two weeks from now you get a paycheque for $27 because they took the emergency salary advance off your paycheque — that’s reality. I’m not making this up. I wish I were. This is what’s happening to our members.
Senator Black: You can’t make this up.
Should I or should we worry about the types of individuals, Mr. Phillips, that you mentioned when these kinds of difficulties — and we all know many people live from cheque to cheque. What are we doing to make sure they’re not dealing with credit agencies and mortgage people? What’s happening to help these people?
Mr. Phillips: What I would suggest is that we stop collecting overpayments for a period of time; put it off. That would alleviate a lot of hardships. As I’ve outlined and has been outlined before, when someone is getting an emergency payment and then they immediately take it back, stop collecting the overpayments for a period of time.
Senator Black: What about the underpayments? What about people who are not being paid?
Mr. Phillips: They can get their emergency payments. I believe it’s 70 per cent — correct me if I am wrong — of their salary that they get emergency pay for. You can bump that up to 90 per cent.
Senator Black: Why can’t you get 100 per cent?
Mr. Phillips: I don’t know all the ins and outs, but okay, let’s go for 100 per cent, then.
Senator Black: It’s your salary. You’re entitled to it.
Mr. Phillips: Stop collecting overpayments and reimburse employees at 100 per cent would be a definite start.
Senator Black: What’s this remission order you mentioned?
Mr. Aylward: That was in my opening remarks. The remission order, right now the interpretation by the Canada Revenue Agency is that when an employee receives an overpayment, they are responsible to repay the gross amount unless the overpayment was settled in the same tax year. So in 2017, if you received an overpayment and that overpayment was reconciled by the end of 2017, you only needed to repay the net amount. If you go into the next tax year, you are required to repay the gross.
This is a policy of the Canada Revenue Agency. This is an interpretation. We’re asking the government, the legislators, to simply have this remission order in place so that the Canada Revenue Agency, like they’ve done over the last several months in retracting several of their policies and interpretations on a number of issues, retracts this and says, “We will not collect any gross payments on any overpayments that federal public sector employees receive because of the Phoenix pay system.”
Senator Black: That’s helpful. Thank you all very much.
[Translation]
Mr. Aubry: Providing better service to employees who are experiencing problems could be one way to help them. Right now, they have to contact call centres, and the operators at the other end have limited access to the data stored in the system. That means they cannot really help employees who are having problems. And that is when callers actually manage to get through, because the call centres are having the same phone line problem as the Canada Revenue Agency. Providing more direct services to members would provide some reassurance and go some way to solving the system’s problems instead of just taking note of the issues and adding them to the pile of complaints waiting to be processed.
[English]
Mr. Phillips: I would just add one thing. Maybe for the affected members you could extend the income tax filing time. It’s very complicated. If you’re an affected employee, give them an extra couple of months in order to complete their income taxes. That would be very helpful and would be a start as well.
Senator Marshall: I realize this is a terrible mess, and I don’t know how the government is going to get out of it.
Between your three organizations, you’re here representing 200,000 employees. I don’t know how people go to work and concentrate on their jobs if they’re wondering whether they’re going to get paid or not.
Mr. Aylward, I have a specific question for you. The Miramichi Pay Centre, is it just your members there? Do you have members there or are all they all PSAC?
Mr. Aylward: They’re primarily PSAC members.
Senator Marshall: How many people are down at that centre?
Mr. Aylward: Right now there are about 700 employees at the Miramichi Pay Centre.
Senator Marshall: We’ve heard a lot about that. Do you think it would be a benefit if the committee went down to visit the pay centre?
Mr. Aylward: I think it would be absolutely fantastic if this committee went down, met and talked to the workers at the Miramichi Pay Centre, with the caveat that it was just this committee and not my supervisor or my manager sitting in the back, that the workers were free to speak to this committee. That’s what you would need. That would be very helpful.
Senator Marshall: Because the impression I’m getting is they would be overwhelmed, I would think, by the volume of transactions.
This next question is to the three of you. The problems are emanating from the bottom with regard to overpayments and underpayments. That’s the issue I’m focusing on. There must be some process in place whereby your members must be funnelling their issues up to your organizations. Could you talk about that?
How do the three of you know what’s happening to your employees? And how do you relay that to government? In your discussions with the two previous senators, you are coming forward with what sounded like good suggestions, and I think that would be based on discussions with your members. How are you relaying that? That’s a great source of recommendations to the government.
Could you talk about how it comes from the bottom up, how you relay it to the government and what’s happening? If the three of you could briefly tell us, because some of you had some really good suggestions.
Mr. Phillips: I’ve been in the job only a month, so all the intricacies of how we talk to the government is a little bit difficult.
Senator Marshall: You are fresh, right?
Mr. Phillips: I haven’t been called “fresh” in a long time, but I’ll take it tonight.
I can tell you, though, that our members — the economists and translators — often are reluctant to talk to the union. There will be a couple of them that will talk to one another and then one of them will talk to us. In our union, a lot of our members will talk amongst themselves. One person will come into the national office. We have some dedicated staff to help them out, but then they go back to their home department or friends and say, “Johnny down in cubicle three, he had that issue. Why don’t you talk to him?” They don’t necessarily always come to us.
That’s what I touched on in my message. With a lot of the issues, we don’t even know how many of our members are necessarily experiencing these problems because they don’t always come to us. So we might have one member and that one member might tell their friends, and then it’s a network of ideas.
Senator Marshall: Nonetheless, you make some good suggestions. How does your union —
Mr. Phillips: I’ll pass it off to Mr. Vézina.
Claude Vézina, Executive Director, Canadian Association of Professional Employees: What we’ve done internally is that we have created positions just to deal with Phoenix issues and, of course, we advertise to all our members through emails that if you have issues with Phoenix, feel free, or don’t hesitate to contact the national office.
Our people dedicated to this service open files. In some departments, they have good contacts or direct contacts with people who are able to deal with issues related to Phoenix. In some cases, it’s working very well. But for some other departments, the people are so overwhelmed by it, even their contact people or even when it’s a formal grievance hearing, they’re openly telling us there’s nothing they can do.
It varies from one department to another, but in some departments, some issues are getting resolved, and we’re happy to see that. I don’t really understand why it cannot be consistent, government-wide.
Senator Marshall: The volume of transactions is so high. I think we’re looking at 600,000 now. You almost have to break them down into small groups and say, “Okay, we’re going to put these aside, put the overpayments aside.” I think somebody recommended that. Then decide which ones are a priority and get them under control.
Mr. Aylward, could you talk about what’s happening with PSAC?
Mr. Aylward: Internally, we have an escalation process in place where employees will go up through their local, through their component and through their individual department to try to resolve the issues. If it can’t get solved there, it comes to the PSAC. We have an escalation process with Public Services and Procurement Canada. Those issues go directly to one of your witnesses from yesterday, Mr. Lemieux, the assistant deputy minister with PSPC.
How do we communicate our issues with the government? We have what’s called an executive-level union management consultation committee, which the Public Service Alliance of Canada sits on with some of the other bargaining agents within the federal public sector. The Secretary of the Treasury Board sits on that, the associate deputy minister, Mr. Linklater, sits on that, as well as Mr. Lemieux.
Initially, that was a success. We were able to bring the issues forward. Now it seems like things are being stalled at that committee. It’s become an exercise in frustration meeting with this committee because you’re told at one meeting, “Okay, we’re going to have a report on such issues that you just talked about, and there are a number of outstanding cases and this is what’s going to be done.” You get to the following meeting and they say, “Well, we don’t have the report yet.” Who are you waiting on to produce that report? “Well, it’s ourselves.” This is PSPC. How can you tell me that at our last meeting you said you were going to produce a report and now that report is not ready? That’s very frustrating as well.
As well, officials from the Canada Revenue Agency are on that committee. We’ve raised the issue of the exemption, and they seem to be simply reluctant to do it. As I said, it’s a matter of interpretation and a policy change.
Senator Marshall: Does that committee make decisions with regard to putting overpayments aside? What comes out? Is it just a committee that meets and that’s it, or is it a committee that you feel is action oriented?
Mr. Aylward: As I said, it initially was action oriented. There were things getting done. We would raise issues from our members who weren’t being paid properly, as well as from our members in Miramichi, saying, “Here are the issues we’re facing.” My colleagues from the professional institute sit on that committee as well, and it now seems that the committee is getting bogged down for whatever reason. It’s a very busy time, no doubt, because of the income tax season and trying to get things done. But still, there seems to be a reluctance on the participants of that committee, both from Treasury Board and in particular from Public Services and Procurement Canada, of actually getting things done and moving forward.
Senator Marshall: Mr. Aubry, do you have a comment?
Mr. Aubry: When it started almost two years ago, through our network of stewards, we were able to have good contact with our members. They were raising their issues with us and we were able to connect directly with upper management within PSPC to have some form of resolution of case-specific employees that had issues. But with the scale of the issues, the numbers of employees who are affected now, that network doesn’t work anymore because thousands and thousands of people are affected regularly.
So that way of going with management, through consultation and those special committees, doesn’t work anymore with the scale that the issue has grown into.
But to keep closer contact with our members, we have a fair network of stewards who are dedicated, who support their members locally, who also raise the issues with our employment relation officers that we have within PIPSC, which are staff. We also use social media to allow members to talk about their issues, and we support them online. So it’s another way to connect with them locally, closer to them, and that’s how we get a lot of those stories that they are suffering.
Senator Marshall: Do you think they’re making progress dealing with the issues of overpayments and underpayments, or do you think they’re falling further behind?
Mr. Phillips: I don’t believe they’re making progress. It’s just an opinion of mine right now.
Mr. Aylward: It’s getting worse.
Senator Marshall: It’s getting worse.
Mr. Aubry?
Mr. Aubry: The same. There are so many that they’re not able to cope with it.
Senator Pratte: I want to follow up on exactly this point.
You may have heard the testimony of the people from Treasury Board and PSPC yesterday in front of this committee. They obviously admit the importance of the problem, but they did mention that a number of initiatives have been taken. One thing they did say, even though they admit that the number of problematic cases is still very high, was that the worst cases — for instance, parental leaves and people with disabilities and the types of cases that Mr. Phillips described — were prioritized and therefore processed in a speedy manner. Therefore, even though the number of transactions that were not processed is very high, the more problematic cases were dealt with expeditiously or as expeditiously as can be expected considering the problems with Phoenix. Is this the case?
Mr. Vézina: I think internally we’re trying to prioritize those types of cases, the more serious ones. As I mentioned earlier, it seems with some departments that we’re able to bring those to a resolution. But there are some that have been out there for quite a long time.
I’m always quite concerned when you have a serious case that you go through levels 1, 2, 3 of the grievance process and it’s unresolved, and then we have to refer it to adjudication. That’s a big problem for me. That should never happen. Within the three levels of the government, those serious cases should be resolved.
Mr. Phillips: I would add that, as I mentioned earlier, Phoenix is automatically supposed to recover some of the advanced funds from the first available funds. So because that’s still the case, as long as you’re still collecting overpayments from people who are also in underpayment situations, the problem — even though it’s a priority case, I outlined that someone gets some money this week and next week it’s taken away from them. Although they’re being looked at, things can continue. As long as they’re still collecting overpayment situations, the problem will continue, I think.
Senator Pratte: I’m not trying to minimize the problems, because this is obviously an extremely serious matter. I’m just trying to get an idea of whether things are starting to get a little better or whether things are still getting worse. If there were an index of the seriousness of the problem, and let’s say last month we were 8 out of 10 as far as the seriousness of the problem, are we now at 7.8 or are we still at 8?
Mr. Phillips: What you’re talking about would be ideal. We don’t have that index.
My background is from Statistics Canada. I worked at Statistics Canada my whole career. I would love data like that, but it is not being made available to us. I would just eat that up. That data would be ideal, but we don’t have it. We can only go from what we’re hearing and what we feel and what we think. From what we feel, hear and think, the problem is not getting much better.
Mr. Aylward: As far as the scale, I would think we’re still at 8 or even higher as far as the problems we’re seeing.
One of the issues we have is the inconsistency within the individual departments and agencies and how the issues get addressed within those individual departments and agencies.
Some departments do very well. Some are not facing the problems of other departments, such as the Canada Revenue Agency and the Canada Border Services Agency. They have their own separate HR system. Their paycheque comes out of Phoenix, but the information that’s going into it is not input by Phoenix; it’s input by another system. So the problems we see out of those two agencies are very few compared to some of the other departments, such as the Department of National Defence. We have some major issues in that department.
So, again, that addresses the whole compensation adviser thing. If I’m in a department and am getting overpaid, underpaid or not paid at all, I really don’t have anyone to turn to, and that’s the whole problem. Things are not getting any better.
Senator Pratte: I would like you, Mr. Aylward, to elaborate on and explain the recommendation that you made about hiring compensation advisers. The government tells us that they have hired 900 people over the last few months, encouraged by the unions and following an agreement with the unions. I want to understand exactly what it is you’re asking for that is different from the hiring they’ve been doing over the last few months.
Mr. Aylward: There are two issues. First of all — and this has been talked about by my colleagues as well — there is a call centre in Toronto staffed by temporary private sector employees. Today they’re answering the call for Public Services and Procurement Canada; tomorrow they may be answering the phone for Canadian Tire.
Senator Pratte: Is that part of the 900 they’re talking about?
Mr. Aylward: I’m not sure whether it is or not. I hesitate to guess. So that’s one part of the problem.
The other part they’re talking about are these 900. A lot of those individuals have been put in satellite pay offices. We need compensation advisers hired in the individual departments and agencies. Those compensation advisers that were let go were our members. We put out a call and said, “If you were a former compensation adviser, we need to hear from you.” We’ve had employees come forward and say, “I submitted a resumé and I didn’t get hired. They said I wasn’t properly fit for the job.” You were a compensation adviser for 15 years and now all of a sudden you’re no longer a proper fit for the job?
It’s almost like a shell game being played and a numbers game. We need to put the people where we need them the most, and that’s in the individual departments and agencies.
Senator Pratte: That would backtrack completely from the whole concept of Phoenix, right, which was to put people in Miramichi and no one left in the departments?
Mr. Aylward: No, no. We can still have a centralized pay system in Miramichi. The fact that it’s in Miramichi has nothing to do with the problems. That pay centre could be in downtown Toronto, in Halifax or here in Ottawa. It has nothing to do with the fact that it’s in Miramichi. I want to make that very clear. No matter where you put it, the system doesn’t work. It’s totally regardless of where it’s located.
What we’re talking about is you can still have a centralized system in Miramichi, but we need people in the individual departments and agencies to assist and help the employees who are having the problems. Because 10 or 15 years ago, I knew all I had to do was go up to the fourth floor and talk to my pay adviser. That pay adviser is no longer there.
So we can still have a centralized system in Miramichi. That’s not the issue. We need more people back in the departments and agencies.
The Chair: Mr. Aubry, I know that you wanted to make a comment before the last question from Senator Pratte.
[Translation]
Mr. Aubry: If I can come back to your question about the system for prioritizing cases, we can see a difference between departments, depending on the resources available and the type of request. When you set up a system for prioritizing cases and 10 people are having problems, the tenth person can expect to have their problem dealt with relatively quickly. When 160,000 employees are having problems, you are never going to get to the person at the bottom of the list. The prioritization system is not working, because it is not capable of growing as the number of cases to be processed increase.
[English]
Senator Neufeld: Much the same as Senator Black, I’m really disappointed that this is such a mess and that people are having to continue to work under this stress. What we want to do is get information so we can make recommendations to government that can actually happen.
I have a number of questions. Yesterday, when Mr. Linklater was here, they told us they had about 1,400 people hired. Since the pay system went in, there was a certain amount, and then when things started going wrong they hired more. Would you agree with that? That’s a number we got from them. There’s no way we can confirm that, but would you think that would be correct, across government, that they’ve hired 1,400 people in total, including what’s at Miramichi?
Mr. Aylward: I think that would be fairly accurate.
Senator Neufeld: That would be fairly accurate? Okay.
The other thing is that I see in one of your notes, one of the gentlemen who spoke, when we talk about grievances, I see here it says that they have filed close to 50 formal individual grievances. Yet when I look at the numbers last June, it’s about 110,000 people who were either overpaid or underpaid. Can you help me here a little bit? Why would I hear there would only be 50 grievances if there are 110,000 people either being overpaid or underpaid and this has been going on for two years?
Mr. Vézina: The stats you’re looking at are from our report. What’s happening is that the first step we’re doing when members contact us is to try to put them in contact and work with the department in question to bring the matter to a resolution. The approach of the association is to do everything we can to bring the matter to a resolution; and if we have to, we’ll file a formal grievance. So it takes quite a bit, I think, for the type of members that we represent, to go the formal route. But we do have quite a few informal cases, as we mentioned. That’s why the formal grievance is very limited.
Senator Neufeld: Are those the only grievances from 300,000 employees?
Mr. Vézina: No, no. Sorry. Our group is 14,000 members. That’s just for the association.
Senator Neufeld: Can I ask the other gentleman, then, to tell me how many grievances they filed? It’s 50 formal individual grievances for 14,000 people.
Heather Finn, Special Projects Officer - Phoenix, Public Service Alliance of Canada: At PSAC, the grievance process starts in the workplace with a member of the union executive or the shop steward. They only get referred to PSAC national when it goes through the various levels within the department and then it’s referred for adjudication. For PSAC national to track the number of overall grievances is impossible because they’re all starting at the local level.
We’re only able to count them in total once they go through the various stages within the department. We represent a lot more members than our colleagues at CAPE. I can definitely assure you there have been much more than 50, but in terms of giving the exact numbers, it’s difficult for us to count.
Also, there’s the grievance process. There’s also the various processes that have been put in place to help people deal with it in an immediate way. Grievances are still an important part of that process, especially in terms of protecting recourse down the road for our members who are having problems. But there’s a bit of a parallel process with a number of the things that the unions have fought to put in place, such as expanding the emergency salary advances access and out-of-pocket expenses. There is a claim system set up if you have interest fees because you had to carry a balance on your credit card and you didn’t get paid, insufficient fund charges. If you bounced cheques, there is a process for that as well. So that is parallel to the grievance process.
Senator Neufeld: So you can’t give me a number, then. What you’re telling me is you don’t have a number you can give me?
Ms. Finn: We don’t have a number that we can give.
Mr. Aubry: Our members are also professional, and they’re trying to use the process that has been put in place around Phoenix by raising their own issue. They are part of all the cases reported by PSPC.
Also, through our network of stewards, a limited number of members did raise formal grievances, but we managed to track at least 900 of them who have passed through our hands and are slowly moving forward. But they’re not making a big dent in the system because, at the end, what is behind the system doesn’t work, so they don’t get resolved and are still pending.
Senator Neufeld: When it first started, I can recall reading quite a bit in the newspaper about what was going wrong, but it went kind of silent. I don’t read much about it anymore. I don’t hear much about it on TV. But this is a colossal error. If this was the private sector, the owner of the company would be in jail. There would be screaming on the streets. But with this government we now have, I don’t hear that. I don’t see it in the newspapers. So the public doesn’t really know other than people who are close to all of these workers; they would know.
Why is that? Why don’t we hear from the union? Why don’t we see them choking somebody down a little bit? Maybe the membership doesn’t feel you should do that, but that’s not what I’m kind of used to.
Mr. Phillips: The members of CAPE aren’t huge activists. They’re not the people who will jump up and down and scream as much, except when there’s a huge problem.
Obviously there are issues. What the newspapers decide to pick up on, we’re always open to do interviews and raise the issues.
I think it’s a testament to the fact that we only have 50 formal grievances with so many problems. I don’t know. Maybe Claude can explain.
Mr. Vézina: I could give you an example of the type of phone calls we would get from some of our professionals. People will call and they will raise their frustration with the system. They don’t want to talk about it to their manager. They don’t want that to look bad on them and they don’t really go ahead and file a formal complaint. But the comment that keeps on coming is that, “Even if I were to file a complaint or a grievance, with all of what I see in the press, what is it going to give me?” The problem is still there, and the government has no solution in bringing those matters to a resolution.
The sense that I get from a lot of those cases is people have lost hope in bringing the matter to a resolution. They’re sitting back and hoping that the government is going to find something to resolve it. That’s the sense in general.
Mr. Aylward: You’re absolutely right, Senator Neufeld. When this first happened, it was news. Then it became almost the norm for the media. The media doesn’t work that way. The media wants to have something they can sensationalize. They did that for the first six months or so while this was out there. It’s still a media story here in Ottawa, in the National Capital Region, simply because of the numbers.
In respect to choking someone down or taking action, I will say that the second anniversary is on February 28. Thank you.
Mr. Aubry: On the 28th, you are invited to join us.
Our members are public servants. They’re here to serve, not to complain. So they’re going through the process and accepting that we’ll suffer a bit and eventually it will be resolved. They’re holding.
[Translation]
Senator Forest: Thank you for being here. Yesterday we heard from individuals who represent the organization, the employer. This is a huge mess, and such an important one, because it affects what is most important to any organization, its human resources. It is rather discouraging to see this in 2018.
We talked about a number of things yesterday, and I asked Mr. Linklater whether the magnitude of this mess requires everyone’s cooperation, including managers, senior executives, middle managers on the ground, employees and unions. Everyone needs to work together in order to solve this problem as quickly as possible. This has been dragging on for two years now. We hope there is a light at the end of the tunnel. Mr. Linklater’s response — and I’d really like to hear yours — was that there has been good cooperation and transparency as to the sharing of information between employees, managers and you, the unions.
However, I was surprised earlier when you said, for example in your response to Mr. Aylward, that there are call centres in Toronto, but you were not sure whether the employees working there are among the 900 new hires. Would you say that the cooperation among the parties involved — that is, management, employees and you, the unions — is truly transparent and healthy? In my view, fostering mutual trust and a respectful, transparent approach to the sharing of information is essential. Would you say that this condition, this environment, exists so that everyone can work together to fix this unbelievable mess?
[English]
Mr. Aylward: I would characterize it as there is an attempt to be transparent and open and cooperative.
As I made reference to earlier, when you’re told, “At the next meeting, we’re going to provide and produce a report,” and the next meeting comes and goes and that report is never produced, there is obviously speculation on our part of whether true transparency and cooperation is really happening.
Mr. Phillips: By and large, the spirit is there. It’s hard to ignore the problem and not recognize that this is a huge problem, but Phoenix is broken. There’s no way to fix it in the short term. The situation is that’s the reality we have to deal with.
You can get a deputy minister in a department to really want to fix things, but if they don’t have the staff to fix it, if the call centre in Miramichi doesn’t have the capacity to take calls — 15,000 people called for the January 19 date and 10,000 people weren’t able to get through. The deputy minister could have been full of good intentions, but what do you do when the system is just broken anyway?
[Translation]
Mr. Vézina: I think the people are there, and on the political side — certainly within our union — people are prepared to devote the resources to work with the government and try to solve these issues as quickly as possible. I am confident that our members would support us, and that goes for any approach we take, if it can help.
Mr. Aubry: I would agree that the political intent is there — to help, to contribute, to work together. However, part of the problem is the lack of human resources, the lack of pay advisors, or adequately trained pay advisors, to do the work. The other issue involves technology, since the system is not working. Even if the political will is there, until the software is fixed, it will not work. As long as there are not enough pay advisors to enter the correct data into the system, it will not work. Good will is great, but ultimately, the system needs to be fixed and we still have a long way to go to achieve that.
Senator Forest: Ms. Cléroux, from the Human Resources Directorate of the Secretariat of the Treasury Board, told us that one of the biggest factors at the root of this problem is the culture surrounding how to process changes correctly and quickly. She told us that online training is currently being offered and that two-fifths of the people involved have taken it. That is only 40 per cent, so the other 60 per cent still need to take it. I asked her whether local managers are encouraging people to take the training immediately. Are union members motivated to take it? If you are saying that this is one of the main problems, and that processing changes and data was one of the main reasons the system failed, that training should be everyone’s top priority. Would you agree?
Mr. Aubry: I heard her testimony yesterday and, as a former software developer, I know that when software is designed properly, all the conditions should be there for it to work. With regard to the situation Ms. Cléroux described involving transactions that need to be entered into the system as quickly as possible, the old system did not have the same requirement and it still worked. When the new system was being developed, that feature was lost somewhere along the way. That created a weakness in the current system, which was poorly designed. Yes, I agree that public servants can be trained to enter the data into the system as quickly as possible, but the fact that the system does not address the previous condition is a design flaw.
[English]
Mr. Aylward: On the training, Ms. Cléroux referred to two issues. First of all, we had requested that this training be mandatory, and we were told that the government couldn’t do that. They couldn’t make it mandatory. So I’m not surprised with the number who actually participated. As well, the training came two years too late.
[Translation]
Senator Forest: You are telling us that the Phoenix brand is nice and that the government does not want to let it go. I can tell you that, if I were the owner, I would be a little embarrassed to sell Phoenix to another government, especially if it had previously failed. There is the tendering process and the entire normal process of developing a system. You’re a computer scientist, you know, but something must have happened during the whole process of getting into such a mess. There was a bidder, IBM with PeopleSoft. In the tendering process, the contract was awarded one or two years after the decision. After six years of system preparation, the system was implemented and it did not work at all. How can you explain that?
Mr. Aubry: I look forward to the Auditor General’s second report. Yes, it is unfortunate that only one bidder could be considered in the process, especially since the bidder had demonstrably had problems in the past. More questions should have been asked. That was also the time when the former government was trying to make cuts everywhere and to be careful about spending money in order to have a good-looking budget. Did that bias the selection process to limit the needs of the system and make it not work? Possibly. We deplore the fact that there was only one bidder and that the contract was subcontracted.
Senator Forest: You are suggesting that the government put aside the Phoenix pay system that affects the 13,000 computer scientists so that they can develop a new system. The 13,000 computer scientists have mandates. If they leave to develop a payroll system, there will be other problems elsewhere. Could you tell me what your position is on the government using its internal resources to develop a new system? Would it be done in parallel? If we look at what happened with Phoenix, it is quite a tall order.
Mr. Aubry: We would consider a good two-pronged approach. First, there would be a team that would continue to maintain the current system and try to solve the problems as much as possible so that people can be paid today. At the same time, there would be a second team with a number of computer scientists who would analyze, design and develop the new system, which would be implemented after being well tested and well integrated, step by step, with all the departments, taking into account all the collective agreements. So it would be a matter of maintaining the current system until the new system is ready. That is the option we would consider.
Senator Forest: Are senior executives and managers paid by the Phoenix pay system?
Mr. Aubry: I think they have a slightly different system and they are not affected.
[English]
Mr. Aylward: Just on your initial comments, senator, around Phoenix and the owner of Phoenix, Phoenix is just a name that they put on it. The pay system is PeopleSoft North America and it’s an Oracle product. Public Works and Government Services at the time had a “name a new pay system” contest, and they selected Phoenix for whatever reason. I believe a senator referred to the dictionary and the definition of “Phoenix.”
If you recall, when the whole pay administration and the amalgamation of all of this was initially announced, it was announced that it was going to save $70 million a year. There was talk about IBM being brought in to customize it.
We believe that IBM came in and were asked to do A, B, C and D. They came in and did A, B, C and D. They should have been asked to go A to Q, and they weren’t asked to do that because of potential cost savings. Instead of saving $70 million dollars year, I would suggest that we burnt through already approximately 10 years of savings.
Senator Cools: I would like to thank all of you for coming before us. I’ve been sitting here listening with some care. The picture you have painted is pretty grim. That is distressing to me, to us, to all of you and especially to the people who have not been paid properly. That is distressing to an extremely high degree.
As I’ve been sitting here feeling that we, as this committee, should do something firm and strong, I found myself not being able to come up with a suggestion as to what we could do that would be strong and firm and helpful.
I thought perhaps I could put the question to you. Could you give us suggestions as to what we could do — three or four things — to somehow or another rectify, correct or improve the situation?
He has a suggestion. He is ready to go.
Mr. Phillips: I made a couple of suggestions to help people out.
Senator Cools: I mean in terms of this Senate committee.
Mr. Phillips: Unfortunately, I don’t know what is within your power. I will point out —
Senator Cools: You should try to discover.
Mr. Phillips: Great; write cheques.
I came from Statistics Canada, which I mentioned earlier. It’s one of the better departments in the fact that we have fewer Phoenix problems than any other department. It’s because we are able to maintain our pay people, namely pay staff that are there to help us. I still feel like I’m part of Statistics Canada so I talk about it like it’s my home, because I was there for over two decades.
The staff there were phenomenal. They had pay staff on site to help employees that ran into problems. They also were proactive in that they were looking at who was getting a zero pay. They knew it a week beforehand and they approached the person and said, “We see there’s a blip in your pay.” They made a proactive offer to do the emergency pay before the pay period came.
My understanding is that in a lot of the departments an employee on payday would show up and there was nothing in their account. It was a big surprise. However, because we had pay advisers and this pay process in place, there was a proactive offer and a reaching out to everybody who was having pay issues before the payday happened.
If you follow a model like that and develop best practices — I’m not saying that what happened at Statistics Canada is flawless, and I’m sure there are very good points in many other departments — you could start picking up on those and spreading them out.
My colleague from the alliance has pointed out that hiring back pay advisers would probably be one of the very first steps. Put them back into the departments to help out the people. As mentioned, you can walk up to the fourth floor and talk to a pay adviser.
Our members don’t even understand how to read their pay stubs let alone calculate how much they’re going to get paid. A lot of people don’t even know what their pay is supposed to be.
The very first step would be hiring these pay advisers to work in the departments to help out the people so they can actually go there with their pay stub and say, “Am I being paid underpaid or overpaid?” They can actually be more proactive and reach out to employees that are going to run into a zero-pay situation before it actually happens and before the automated payments come out of their bank account but no money went in. They may have an automated for their VISA and their mortgage, or whatever, but if they knew a week beforehand they could make arrangements and that sort of thing. I would echo the comments made earlier.
Mr. Aylward: Senator Cools, thank you for the question.
One of the things we have to look at here is that lessons have to be learned from all of this. One of the lessons learned that has to be a consideration of this government is that any time you want to do a modernization of anything, listen to the employees who are doing the job or who were doing the job.
Earlier, Senator Marshall made an excellent suggestion for this committee to go to Miramichi and talk to the workers. I would emphasize again, please, if you do that, make sure that the employees can speak freely. They will tell you what’s actually going on. They are the ones who will give you sound suggestions and options as to what really needs to be done. They will tell you that they don’t input anything into the Phoenix pay system. Now they actually fill out an Xcel spreadsheet and manually put the information in. That’s how bad the system is.
I think Senator Marshall saying go to Miramichi and talk to the workers is an excellent suggestion for this committee.
Senator Cools: That sounds like a good idea. I think we should vote on that soon.
The Chair: We’ll move on to second round.
Senator Marshall: I’ve made a list of all your suggestions, so I have a record of them.
The next problem I see looming is the T4s. Have employees started to receive their T4s? They haven’t?
Mr. Aylward: No. Public Service and Procurement Canada, who are responsible for issuing T4s, basically told us that they will not be issued before the third week of February.
Senator Marshall: Is there anything that unions and associations could do now, almost the like a pre-emptive strike? People are going to get T4s that are wrong. There’s no doubt about it. There will be a lot of people getting T4s that are wrong. One of you mentioned that maybe you could get the CRA to extend the income tax filing time.
Is there anything like that that you can do on a proactive basis in anticipation of the problems you know are coming? There are big problems coming with the T4s.
Ms. Finn: One of the things we requested was the remission order for the overpayments. There was the extension of the reporting deadline, as Mr. Aylward said in his presentation, for not having to repay the gross amount. One of the biggest implications when it comes to taxes is overpayments.
One of the issues is that they were going to amend people’s T4s if they were able to report their overpayment for the 19th.
As Mr. Aylward said, we have serious concerns that that information was able to be entered in.
Senator Marshall: That’s not going to be done, right?
Ms. Finn: Yes; pretty much. We have strong reason to believe that that is not going to be done.
Essentially, the remission order would mean that the difference between the net and the gross wouldn’t have to be paid. Essentially, people will just have to repay their net. They have said for people to file their taxes on time and try to deal with it after.
I think what’s really hanging over people’s heads is the idea that they have to pay back more money than they received. I think it would be one bit of stress alleviated from people if they didn’t have that, even if they’re going to have an incorrect T4 for other reasons. Some people have been overpaid in certain cases and underpaid in others. There isn’t necessarily an end-to-end way right now of prioritizing an end-to-end look at everybody’s case, which is part of the whole problem.
I think the remission order for the net versus gross issue would be something that the government could do now that would at least alleviate a lot of people’s anxieties.
Senator Marshall: I know the Canada Revenue Agency has its own problems with regard to answering their telephones, but is it a possibility that something could be arranged with CRA, for example, that they would have separate lines for the federal public service for a certain period of time?
Emily Watkins, Senior Advisor to the President, Professional Institute of the Public Service of Canada: There were things set up last year. We are now into the second tax season with reoccurring problems.
Senator Marshall: So they’re experienced now.
Ms. Watkins: There was some triaging done with the call centre, and employees were given to a CRA employee who was more able to address their particular situation.
Senator Marshall: Did that work?
Ms. Watkins: That worked and we hoped that system would be reproduced this year.
Senator Marshall: Perhaps you could make the suggestion to them to do that.
Ms. Watkins: It’s a complicated situation because they are able to prioritize extreme cases, as they told you yesterday. But you still have this massive amount of people who have what aren’t called priority pay cases but they may have been missing pay for long periods of time, missing allowances and overtime that make up significant amounts of their pay, and they may have received an overpayment. But those other items have not been corrected. You can just see the cascading issues they are facing.
Senator Marshall: That’s right. People who have retired are continuing to be paid, and therefore their pensions are wrong and their deductions are wrong and the list goes on. I’ve been talking to some public servants in Newfoundland and Labrador.
Someone also mentioned to stop collecting overpayments for now, just put them aside.
I also read somewhere to disregard anything of $100 or less or even $500 and less. Is that practical? Do you know, when you get an issue, that it’s going to be less than $100 or less than $500?
Ms. Watkins: Some of the issues with classifying “low monetary” is that some people’s problems are not monetary but are significant. We had a member who just contacted us recently saying they hadn’t had their dental plan benefits kick in. This is a common problem, or people’s benefits get randomly changed on them. This person was saying, “I’ve been delaying my dental work and now it’s 12 months.” That would be considered a non-monetary issue, but it has become a significant issue.
Senator Marshall: Thank you very much.
[Translation]
Senator Pratte: Mr. Aubry, I would like to come back to your proposal to replace the Phoenix system with a system designed and built by your members.
First, if we read between the lines — which is what Mr. Aylward was sort of saying — here is what I have understood from the testimony of the Public Services and Procurement Canada officials. They are basically saying, “We made the decisions and told IBM what to do. IBM did what we told them to do, so the mistakes are basically our fault.” So they seem to be saying that IBM is not responsible, and they are not blaming IBM.
Second, I do not want to take anything away from your members, but there must be a number of governments, private companies and multinationals, even larger than the federal Government of Canada, that operate with payroll systems. Surely there are multinationals with 500,000 employees around the world that certainly have pay systems as complex as those of the Government of Canada and that use software that works well.
Here’s my question: What if we were to look at what tools Apple or Microsoft are using to pay their employees to see whether their payroll systems work? I do not see why we would want to build a payroll system from scratch and assume the risk of starting from scratch again. I am wondering a little. I know that the federal government is complicated and that there are separate rules, but I wonder whether this is really the problem or whether the problem is not simply that, for a number of reasons, IBM was given the wrong instructions and that’s where the problems started.
Mr. Aubry: We recognize that the federal pay system is very complex and very broad; it includes 27 collective agreements. There are a lot of departments involved and lots of complicated business rules. Other companies may have those sorts of rules; it is possible.
The development of the Phoenix pay system in recent years has unfortunately been skewed by political interests. Expenses had to be reduced and it had to be done quickly; back-room games were played as to what features needed to be developed and when. Then they wanted to add or change the features. An entire political game probably took place behind the scenes during the development period.
One might think that a system developed internally by public servants, whose ultimate goal is to have a pay system that works, if only for their own pay, would have contributed to this interest; it probably would have worked better than a tool developed by the private sector whose purpose is to make money and which, if the system does not work but has a good maintenance contract, will be very happy. Public servants would have been more diligent in developing a functional system, given everyone’s interest in the outcome.
Right now, unfortunately, we have a system of “spaghetti codes,” since the components do not work together. You press a button and the provincial tax deductions do not work, and sometimes it is something else. A good system must be developed from A to Z, step by step, in the right order, so that all the pieces work together. Unfortunately, that was not the outcome as the Phoenix pay system was developed.
Senator Pratte: This question also goes to everyone. Mr. Aubry, you have clearly come to the conclusion that nothing can be done with the Phoenix system and that we have to start from scratch. It’s a big change, because you have to start from scratch and still get the current system to work for the hundreds of thousands of people waiting for another system in the years needed to develop a new system, be it the one you will design or the one that the government will buy.
Mr. Aubry: Our members do not want to wait eight years for it to work, like in Australia.
Senator Pratte: I understand, but even if you develop a system yourself, it will not happen next week. It will take some time.
[English]
If the other groups also come to the conclusion that the Phoenix system is irreparable and therefore the government has to go to another system, whether it’s built in-house or another system that would come from the private sector or whatever.
Mr. Phillips: From my understanding, it took Australia eight years to fix the same system. Was it eight years? It’s still not working.
It’s at least worth, at the very least, to involve our colleagues from PIPSC and look at a timeline. Is it at least reasonable to start looking at how long it would take them to create a system? At least investigate the opportunity and then go from there.
If you don’t look at all the options, and this is a very viable option, then what are you going to do? The system in Australia is still not working. I would agree with my colleague and at least come up with a timeline.
Mr. Aylward: The Public Service Alliance of Canada is on record saying that we would welcome any new system, developed by anyone, that actually works and pays our members on time and accurately. There’s no doubt about that. But let’s keep in mind the lessons learned from Phoenix. If we’re going to go down that road, then let’s make sure we don’t make the same mistake twice, because then it’s shame on us if we do that.
So make sure we talk to the people who have done the job or who are doing the job. Make sure that the due diligence is done. Make sure the proper testing is done. Make sure the proper training is done. And make sure it works before we roll it out.
The Chair: Thank you.
Senator Eaton: I want to go back to the training. Whether you stay with Phoenix, whether you go into a whole new system, have you been able to change the federal government’s mind about it only taking three months to train a pay supervisor or pay adviser?
Mr. Aylward: Unfortunately, no. That’s their new training regime now. As was referred to several times, the private sector employees who are staffed in this call centre in Toronto simply say, “Hi, thank you very much for your information; we’ll pass it along to someone.” They have no knowledge whatsoever of the pay system.
Senator Eaton: Who do they pass it on to?
Mr. Aylward: To either a satellite office or to Miramichi.
Senator Eaton: What percentage of the slowdown or the incapacity to pay employees on time and properly do you think is the training or the lack of pay advisers? Is it 50 per cent, 30 per cent, 40 per cent?
Ms. Finn: I think it’s hard to measure that sort of thing.
Senator Eaton: So you have the software that wasn’t properly programmed, and then you have the lack of training.
Ms. Finn: Yes, but there was a lack of training — it depends on what you mean in terms of who was getting the training. I think one of the largest failures in terms of training was Phoenix was supposed to be a system that actually downloaded work onto the individual employees. It was supposed to be a system they could interact with and put in a lot of their own stuff.
Senator Eaton: This is each employee?
Ms. Finn: Each employee, yes, not a compensation adviser. But nobody was trained in how to do that.
Senator Eaton: So the employees weren’t trained?
Ms. Finn: The employees weren’t trained on how to use the system. The training that you were talking about, they pushed them to make it mandatory and we said it was two years too late.
Senator Eaton: So I’m an employee, and I’m sitting there and see that I’ve been underpaid. I should have the training to go onto my computer, access Phoenix and say, “I’ve been underpaid or overpaid”?
Ms. Finn: The training I’m talking about has to do with how you use the system if it were working properly. This has to do with entering your overtime and that sort of thing. That training wasn’t there, and there was a lot of what we call HR-to-Pay problems in terms of that information being input, the manager of that person —
Senator Eaton: So the employee inputs their own information, such as: I’m going on maternity leave; I did 16 hours of overtime last week, et cetera.
Ms. Finn: Yes, and then that has to be signed off by the manager, so the manager also has to go in and do that. It’s all in real time. But no one was actually trained that it’s really important that you do it by this date or —
Senator Eaton: So the 6,000 employees weren’t trained to do that?
Ms. Finn: Yes, essentially that was one of the problems.
In terms of the training, they eliminated 1,000 compensation adviser positions and then they created positions out of the Miramichi Pay Centre. Some of the experienced compensation advisers did actually move there, but not everybody did. Those people were trained for a couple of years. These people are the same people who flagged when the system was being rolled out that it wasn’t ready, stop, and they weren’t listened to.
The problem is that the dream of having fewer compensation advisers, essentially replacing compensation advisers with a computer program, and having fewer of them do the work has not worked out very well. I think the problem is that rebuilding that capacity is going to take time.
Senator Eaton: And training all the employees.
Ms. Finn: But also training the compensation advisers.
I know we keep pressing back on this, but I think it is an important point. Once you eliminate that capacity within your organization, building it back is going to take time. What the government needs to do is come forward with a clear plan for a robust training exercise for bringing in new compensation advisers and training them. Yes, that will take some time, but they have to start.
Senator Eaton: I know everybody is tired and wants to go home. Just before we do, do you have a graph or a drawing you can send me? The employees sit at the computer and input their things. Then where does it go? What does the pay adviser do? Just send us a diagram showing us how it all interfaces. Could you do that at some point?
Ms. Finn: Yes.
The Chair: Can you provide to the clerk, please, what Senator Eaton has asked for?
I know, Ms. Watkins, you wanted to say a few words on that same question.
Ms. Watkins: I think Heather addressed most of the things about the training.
A lot of the issues were that these things were rolled out and then we found out at a very early meeting that a manager was not even getting a notification that there was a pay issue they had to deal with. So even if their intentions were good, they didn’t know there were 10 things they had to approve in order for those people to get paid correctly.
The Chair: If you can provide the chart so that —
Senator Eaton: So we can see the relationship, how it was missed.
[Translation]
Senator Forest: I do not understand why people did not want to go to Miramichi. It’s a beautiful place, and New Brunswick senators are amazing.
Senator Eaton: During the salmon season, that would be good.
Senator Forest: You have provided a lot of relevant information. I want to take away something concrete. People need to be responsible, and our role is to ask them to be accountable. What recommendation, a short-term priority, would you like us to remember and take action on? You talked about suspending repayments for the people who had been overpaid, you talked about hiring more compensation advisors, which means creating a new system altogether. What would be your most urgent recommendation in the short term, not in the medium or long term?
[English]
Mr. Phillips: My first short-term recommendation would be to stop collecting overpayments from people who also have underpayments. That’s it.
Mr. Aylward: For the urgency, being February 7, for CRA to provide a remission order and to ensure that if you’re overpaid, regardless of whether you reported it or not, you only have to repay it in net and not gross.
[Translation]
Mr. Aubry: Public servants are humans. They must be treated like humans and with respect. So they must be treated with respect, given the problems they face.
Senator Forest: It is a very broad recommendation. The problem is more significant in the case of your colleagues who have been overpaid than for those who have been underpaid. The priority seems to be to suspend the repayments from those who have been overpaid. Not you, Mr. Aubry, but your colleagues. That’s my understanding.
[English]
The Chair: Do you agree with the comments made by Senator Forest? Do you have any comments on what he just said?
Mr. Aylward: The priority is to pay public servants for the work they do, on time and accurately. That’s the priority.
The Chair: Thank you.
Senator Neufeld: I just wanted to ask, and I meant to do it before, when the present government did the rollout and went live, I believe the Auditor General told us they had been told that it really wasn’t ready to go live. I think, Ms. Finn, you just said that was mentioned by the people who worked in payroll. Would the union have said the same thing?
Interestingly enough, the present government ignored that advice, went ahead, and now they’ve got a problem on their hands.
The other thing was dismantling the old system. Was there a need to dismantle the old payroll system before you initiated the new one, so that if there were some glitches, at least you could go back to a system that had been working, although it was 40 years old?
Mr. Aylward: The system was rolled out in 2016 in two phases: February 28, and then it was rolled out in a second phase at the end of April. At Public Services and Procurement Canada, the government appointed a new deputy minister around the middle of April 2016. Her name was Marie Lemay. Several of the bargaining agents met with Ms. Lemay, who — and I want to emphasize this — was newly appointed. She was on the job maybe two weeks. As the bargaining agents, we went to her and said, “We have major problems with the rollout from February 28. Please don’t do the rollout at the end of April, in two weeks.”And she said, “Well, I’m being told those issues are all resolved and everything is going to be okay now; they were one-offs, and don’t worry about it.”
She was basically being sold a bill of goods from her senior managers, from her assistant deputy “ministers —” from her associate ADMs, sorry. That’s where the problem was. These people, these senior managers within Public Works and Government Services, and then PSPC, were so heavily invested in this that they were blinded; they were simply blind to any issues or any problems. When the deputy minister is told, “Don’t worry; we got it all fixed; there will be no problems,” and then, of course, she relays that to the minister at the time, Ms. Foote, they were believing what they were being told. As I said, they were being led down a garden path, unfortunately.
Senator Neufeld: The second part of the question: Why didn’t they keep the old system in place just in case something went wrong?
Mr. Aylward: That’s a very good question. Back in 2016, we said, “Keep the old system. We know we’ve got problems. Keep the old system in place.” It was called a regional pay system. “Keep working on the issues with Phoenix. When you think Phoenix is fixed, put it back online, and only put it back online for the members of Parliament, the deputy ministers and the assistant deputy ministers; and then, if it works, you can go live with the employees.”
But as far as why it was decommissioned, that’s a very good question. I believe it was decommissioned because they were, again, so heavily invested in this new system, they had to get it out there.
The Chair: Message received.
Senator Marshall: Could I mention for the steering committee to consider Miramichi? I would really like to do that. And also the issue of the minister. The ministers — Treasury Board and Minister Qualtrough, the minister responsible for the department — will we be having them testify? I’ll leave those two issues with you.
The Chair: Absolutely. And should we also bring in IBM?
Senator Marshall: Yes.
The Chair: To the unions, thank you very much for your time.
(The committee adjourned.)