Public Accounts Committee on March 23rd, 2026

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

That is true.

In terms of the recruiting officer, the one who reviews the seven steps, why were so many in that particular position vacant? Did they give a reason?

[Karen Hogan]

I'm not sure that I know the answer to that. I think that would be a good question for the RCMP.

What we did see is that there is a follow-on effect from not having enough frontline police officers and we really focused in on those who provide service to Canadians on a day-to-day basis. Many of those experienced officers move into other areas of the RCMP, whether it be federal policing, special services or even their internal services. When you have a high vacancy rate in one, you tend to have a high vacancy rate all over the organization. I think they need to prioritize where their resources are used.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Your report mentions that analysis of the RCMP's data shows that the shortage of police officers has worsened in the last two years. Why is that?

[Karen Hogan]

I think I would highlight the two elements that I've raised already, one being how long it takes to process an application. The majority of frontline police officers come through the contract and indigenous policing business line. They change their focus to really look at the vacancies there, but many of those officers, once they're experienced, move to other areas. When you don't have a clear picture of what your needs are across the entire organization, you're really only targeting to meet the needs of one business line. You're falling short.

There are many elements that have contributed, but the RCMP tried out measures to try to increase that. They put in place a flexible posting plan.

While that posting plan really attracted thousands more applications than they expected, it had an unintended consequence of seeing new police officers pick the province or territory they wanted to work in—the coasts of the country—and then they saw vacancies in the rest of the country increase.

They've since decided to repeal that, to draw it back, but I think this is why it's important to make sure that you measure whether all of your efforts are having the intended impact.

[The Chair, Conservative, John Williamson]

Thank you. That is your time.

Mr. Lemire, you have the floor for six minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Ms. Hogan, thank you once again for your extremely thorough reports. I would also like to thank your entire team.

Since we're talking about Dayforce today, I would like to give you some background on the issue.

The Phoenix pay system was introduced in 2016. At the time, its estimated cost was $272 million. It ultimately cost around $5 billion. We'll soon be throwing away $5 billion, of which $2 billion was simply used to solve problems. Of course, this is taxpayers' money.

By 2019, we knew that the Phoenix system was flawed and that it wouldn't be the software of the future. The federal government signed a new contract with Dayforce, estimated to cost $57 million. On June 11, Minister Joël Lightbound announced a $350 million contract with Dayforce for 10 years, with a possible extension to 20 years.

In your report, less than a year later, we see that this cost has already reached $565 million. We're already hearing about another $200 million being spent, bringing the total cost of the project to $4.2 billion.

Is this the correct interpretation of the cost estimate for the federal government's pay systems?

[Karen Hogan]

You cited many figures. I must point out that the current costs of over $500 million aren't just related to the contract. The costs also include internal government expenditures. In the early stages, when we have preliminary estimates, we certainly expect costs to rise as things become clearer and as we better understand all the flaws or concerns.

That said, I would expect the government to monitor this closely with the help of a third party. I would also expect it to assess the current payroll processing costs with Phoenix, as well as the payroll processing costs with Dayforce. This would be a good way to see whether the new system has lowered costs for the federal government.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

In this situation, we're talking about an amount that should be $4.2 billion. Does this include the additional funding listed in your report over and above the $565.9 million initially approved for the project?

[Karen Hogan]

Yes, the cost of the project, currently estimated at $4.2 billion, includes expenditures already incurred by the departments. However, this is still a preliminary estimate. It doesn't include an expenditure that I consider quite significant. This expenditure is the cost incurred by all the other departments and agencies that need to make the transition to Dayforce. Currently, the estimate includes only the costs of the system and the costs involved in the central agencies' transition to Dayforce.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

We have only centralized information. We know that 49 departments must make the transition to this system. All this hasn't yet been factored in, and we're already talking about $4.2 billion.

Is this an accurate picture of the situation?

[Karen Hogan]

Some 49 departments use the Miramichi pay centre to process their payroll. We must also take into account all the other departments and agencies currently using the Phoenix system that will be making the transition to Dayforce. There are many of them. A hundred or so departments must also make this transition.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Page 13 of your report, paragraph 31, states the following:

These detailed cost estimates have to be finalized and delivered to the Treasury Board of Canada Secretariat by December 2026 if additional funding beyond the originally approved $565.9 million is to be allocated to the project.

In June, the projected costs were $350.6 million, according to Minister Lightbound. In December, the project was budgeted at an additional $200 million. You're now already estimating that this amount will be exceeded and that additional amounts will be needed for what has already been spent.

[Karen Hogan]

You spoke a bit about the cost of the project in terms of the funding provided by Treasury Board. Yes, certain funding tranches are earmarked for the project. Throughout the process, the project cost estimate must be updated so that other funding tranches can be allocated to the project.

The $4.2 billion figure doesn't include transition costs for all departments. We recommended that the government take a step back to obtain an overall picture of the transition to the new pay system for all departments, not just the central agencies.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

It's a major challenge for the government to assess costs properly in the early stages. Every year, costs rise and departments have fewer and fewer operational skills.

Have you estimated the operating costs associated with contracts awarded to IT firms, for each operation, and the impact on the overall amount?

[Karen Hogan]

No. The project is still in its initial phase. We wanted to get involved and to provide recommendations in order to improve the project and avoid having another Phoenix as the payroll processing system for all public servants.

It's still too early to assess all the contracts. However, I would expect the government to assess the current cost of processing a payroll transaction in order to make a comparison with the cost under the new system. This is one of our recommendations.

This is one of the objectives underlying the system change. It's about reducing the costs associated with payroll processing. We need these targets and this information now so that we can determine the success or failure of the project.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

You said that it was too early. However, I think that, for Minister MacKinnon, it will be too early for him once again. I think that we'll need to celebrate these overruns again.

[The Chair, Conservative, John Williamson]

Thank you, Mr. Lemire.

We'll begin our second round, which will consist of five members for various times.

I'll now give the floor to Mr. Deltell for five minutes.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

Thank you, Mr. Chair.

Good morning, colleagues.

I would like to welcome everyone to your Canadian Parliament.

Once again, great reports have been submitted. I would like to thank you and your team, Ms. Hogan.

I'm concerned about one issue. You spoke, for example, about the Dayforce program. It's a sad reminder of the Phoenix disaster. I say “disaster” because tens of thousands or even hundreds of thousands of Canadian families have endured and lived through disasters as a result of Phoenix's mistakes.

Remember that, on two occasions in 2015, before the launch of operations, we slowed down and even stopped production to make sure that everything was running smoothly. However, unfortunately, in February 2016, although we don't really know by whom and when, the green light was given. This led to the ensuing disasters that we know about.

Now, ten years later, we need to rectify the situation. Dayforce basically seeks to simplify and standardize pay rules.

Ms. Hogan, you expressed your concern that, ten years on, only limited progress has been made in simplifying these rules and that it will ultimately cost more.

Why haven't we learned anything in 10 years?

[Karen Hogan]

That's an excellent question to ask the Treasury Board Secretariat. It reached an agreement with the unions to negotiate the simplification of the pay rules. We've seen some simplification since Phoenix. However, I think that all the parties agree that public servants must be paid accurately and on time. I'll leave it to them to figure out how to accomplish this.

At least we now have a mitigation measure in the form of the Dayforce system's customization. We'll see how that works once Dayforce launches and the first wave of departments make the transition to this new system.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

We also learned that, in 2024 and 2025, 29% of pays were inaccurate. For the Government of Canada workers tuning in, this means that one in three pays, in general, may contain errors. Why does this happen? One in three is a large number.

[Karen Hogan]

Since the transition to the Phoenix system, my office has been auditing the pay system every year during the audit of the Government of Canada's financial statements.

In 2025, we found that the pay of 29% of individuals contained errors. We also found that the source of errors was data entered late or data entry errors in the system. That's why we need to understand that payroll processing is a shared task. Agencies, departments and central agencies are all involved. It isn't just the office.

That's why we need to check the backlog of pay transactions. When all departments and agencies make the transition to the new system, we need to make sure that backlogs and pay errors are completely eliminated. If we make the transition with errors, there will still be errors later on.

I'm also concerned about the fact that the project duration is now three years shorter. I think that the central agencies must manage and mitigate many risks. They need to adapt their plans accordingly.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

For the sake of the people tuning in and the people working in the federal system, including you and everyone with you, should we be more concerned?

[Karen Hogan]

At this time, most of them are paid accurately. My office decided to audit the modernization of the pay system because we want to make sure that we don't end up with the same flaws and errors seen in Phoenix.

We're currently getting involved. We've raised red flags to ensure better risk management. We'll be monitoring the project closely to support the government and to ensure that public servants are paid on time and accurately.

[Gérard Deltell, Conservative, Louis-Saint-Laurent—Akiawenhrahk, QC]

I have about thirty seconds left. I wanted to talk about another good report that you just tabled. It concerns foreign students.

We can see from all this that a great deal of information is being somewhat overlooked. Is this because, naturally, given the challenges posed by immigration and students, many departments work in silos?

We're also talking about a shared responsibility among the federal government, the provinces and even the universities.

Isn't there a better way to combine this? Wouldn't it be better to stop working in silos?

[Karen Hogan]

You brought up two key points. The provinces and post‑secondary institutions should work together more effectively to manage the allocation of study permits.

The Department of Citizenship and Immigration and the Canada Border Services Agency also need to share information more effectively to manage what happens when a permit has expired, when concerns are raised while the permit is valid or when an application is being processed.

I would indeed expect to see better collaboration internally within the federal government, as well as with partners in the provinces and in post‑secondary institutions.