Mr. Speaker, I am pleased to participate in the debate on the motion put forward in the name of the hon. member for Jonquière. I thank the hon. member for her initiative, which gives us all an opportunity to discuss this very important issue with respect to the problems with the Phoenix pay system and their impact on the everyday lives of hard-working public servants and their families.
I have said this before and I will say this again: It is completely unacceptable that our hard-working public servants are not being paid properly. Every day, I am troubled by stories of hardship, anxiety, and stress caused by the failings of the pay system. I hear from and speak regularly with affected public servants from across the country. I read their stories in the news, and I hear regularly from unions about the personal toll that this is taking.
I hear about the family who has a hard time making ends meet during a maternity leave, of the parent who had to tighten his belt during the holidays to buy gifts for his children, and of the young professional who is worried about accepting a promotion in case she will not get a paycheque. These stories remind me daily of the impact on the lives of Canadians, and they are heartbreaking.
I want to assure every public servant and their families that our government is doing everything necessary to resolve this intolerable situation. We recognize that we have lost their trust and realize that they have been more than patient.
Since I have been named the Minister of Public Services and Procurement, I have put a renewed focus on clear communication with employees, in a genuine effort to be open and transparent. As we work toward stabilizing the system and resolving outstanding transactions, it is important for public servants to understand the nature of the issues, the work being done to address them, and, most importantly, the support that is available when experiencing Phoenix-related pay issues.
I will take this moment to call on public servants who are still experiencing pay issues to contact their manager directly to discuss the situation. Managers should be the first point of contact when experiencing Phoenix pay issues.
We know that the strain of pay issues is also being felt by the numerous public servants working hard to resolve this issue. I want to acknowledge the employees at the pay centre in Miramichi, satellite offices, and the departments and agencies across the public service who are working hard to help their fellow public service colleagues. I deeply appreciate their tireless efforts.
Resolving employee pay issues has been the most important file on my desk since my appointment as Minister of Public Services and Procurement six months ago. The challenges are complex and numerous. The project was a long time in the making, and the problems run deep.
Public Services and Procurement Canada is responsible for administering the pay of more than 290,000 federal public servants in the over 100 departments and agencies that make up the federal public service.
The need to modernize the public service pay system was raised in 2008 by the Standing Committee on Government Operations and Estimates. Shortly thereafter, in 2009, the Conservatives began to make plans to transform the administration of pay services. In 2011, the Conservative government acquired the PeopleSoft pay system from IBM and decided to centralize front line pay services for the entire government in a new public service pay centre in Miramichi, New Brunswick.
The goal was to acquire a cost-effective, sustainable pay system. However, it goes without saying that this transformation was an utter failure.
An independent review conducted by Goss Gilroy in 2017 provided a detailed analysis and some 17 lessons learned in six different areas. According to the report, the project failed because the government underestimated its complexity.
Why can the government not now, in 2018, ensure that its employees are paid properly and on time?
The implementation of such a complex business transformation initiative across the entire Government of Canada was a massive undertaking that I believe history will record was set up to fail. The reality is that the Harper Conservatives botched the Phoenix pay system from the start. They chose the high-risk, cost-cutting route that has landed us in this present situation.
To put it bluntly, this project was designed to save money. It should have been focused on serving employees. As we have seen, it accomplished neither. Technology was stripped of important functionality to meet budgets and timelines. The Conservative government chose not to purchase expert training and change management support, and instead tried to handle this internally as cheaply as possible. It ended up being ineffective and insufficient.
I cannot overemphasize the extent to which the lack of proper governance oversight, business processes, technical and human resource capacity, and change management in the early stages of this initiative have contributed to getting us to where we are today. The Harper Conservative government spent $309 million to create an unproven and flawed pay system, and prematurely booked savings of $70 million per year.
The design and implementation were rushed and staff were not trained. It was so rushed that in the summer of 2015, the function of supporting retroactive transactions was postponed indeterminately. Years later, the decision to descope this feature still has a significant impact on employees accepting acting positions, and on pay advisers processing collective agreements.
There was no change management strategy in place. In fact, 700 specialized compensation staff were fired before Phoenix was launched. Many were given notice as early as April of 2014. Perhaps the former president of the Treasury Board, the hon. member for Parry Sound—Muskoka, will help us understand the decisions that were made under his watch. It seems that he made decisions about slashing the back office without understanding the full impact of what they were doing. The second report of the Auditor General, which we expect later this spring, may provide further information and insight into these decisions and their impacts.
When Phoenix was launched, the existing pay system slated for decommissioning was in poor shape and at high risk of failure. Senior officials advised that Phoenix was ready to go. Let me be clear: there was no other option. The employees responsible for delivering pay service using the old system had already been informed that their positions were cut, and many had already left.
Once launched, the Phoenix problems ran so deep that it took time to understand what was wrong and identify solutions to stabilize the system. In addition, there was a backlog of 40,000 existing employee cases that were unresolved from the previous system. To make matters worse, the learning curve associated with Phoenix was underestimated, so transactions were not processed as quickly as planned. More importantly, there was inadequate capacity. The public service no longer had enough experienced and knowledgeable pay experts in its ranks to help transition to the new system. Those 700-plus compensation advisers would have been a game changer had they not been cut by our predecessors.
How did our government respond? We opened satellite offices and hired over 200 compensation staff. These were critical first steps in helping to make some progress in reducing the backlog. We shifted resources, at the request of the union, to prioritize transactions involving parental and disability leave. As a result, those transactions have been processed on time.
However, as the 2016 tax season approached, employees were rightfully concerned with the implications of overpayment for their tax returns. The resources required to handle the overpayments and issue accurate tax slips meant that the backlog of outstanding transactions increased.
Last spring, the department shifted its attention to implementing the 21 collective agreements that our government had signed with public service unions. I should note that these agreements had been ignored by the Conservatives. When we took office, the Harper Conservatives had let all 27 public service union collective agreements expire. Some had been expired for several years. Our government made negotiating these agreements a priority, and, as we said, we have successfully negotiated 21 agreements, which will cover over 90% of represented public servants. This is a great news story, one that has been lost in the shadow of the irresponsible behaviour of the previous Harper Conservative government.
The job of implementing these collective agreements further exacerbated the strain on the pay system. Implementation added hundreds of thousands of transactions to the pay system. We had to calculate retroactive payments going back several years in some cases, and this required data to be pulled from the government's now decommissioned pay system, as well as requiring significant manual calculations. These agreements should have been dealt with much sooner. The Harper Conservatives' adversarial relationships with unions created an added pressure on the new pay system. Again, the department reassigned compensation advisers to process these agreements. The number of outstanding pay transactions continued to rise.
As the government has needed to respond to pay problems, Public Services and Procurement Canada has also been looking at the root causes. One of the major causes for pay delays was the inconsistencies between Phoenix and the patchwork of 32 HR systems in place across government. It is because pay is directly linked to human resources processes that we saw that an integrated pay and HR approach was necessary to address issues. It was also clear that one department alone could not identify or implement all the solutions. A whole-of-government approach was needed.
Addressing those challenges is front and centre in our approach. In November, the President of the Treasury Board and I outlined a series of measures focused on bringing the pay system to a point of stability. Our efforts to stabilize the pay system fall into four broad areas: governance and informed decisions; improved processes and technologies; increased capacity and service; and partnership and engagement.
We know that a whole-of-government approach with strong governance and oversight is crucial. We are addressing mistakes from the past, but the solutions remain imperative today. This is why the Prime Minister established the working group of ministers to ensure that all ministers and deputy ministers were focused on addressing the issues of paying public servants.
We have all hands on deck. An integrated team of senior officials from my department and Treasury Board Secretariat is leading an overall effort to stabilize the pay system, both at the pay centre and across the government. A strong governance model that brings together views and realities from across the public service is supporting the work of the integrated team. It is supported by a deputy ministers oversight committee and interdepartmental working groups.
Our government is also undertaking significant initiatives that underlay the stabilizing of the Phoenix pay system and will improve payroll processing for our employees. These measures include: implementation of legislative changes to deductions and tax rates; improvements to system functionality to process and manage retroactive payments; stabilize payroll processing and HR to pay integration, among others.
We have also signed a new application manage service contract with IBM to shift to outcome-based management on key functional streams. To improve process and technology, we are addressing the root causes of human resources-to-pay system problems, especially the way Phoenix interacts with these 32 HR systems.
Our current human resources pay and finance processes and practices do not align with Phoenix, resulting in many time-consuming manual calculations and delays for employees waiting for their pay. Solving these issues means looking at how pay requests are generated in departments, the HR processes to enter, approve, and send transactions to Phoenix.
This whole-of-government approach to examine and adjust these processes and practices should have been done well before the implementation of Phoenix. The integrated team is putting in place much-needed changes in how we manage our business processes from human resources to pay. We have to ensure the pay system is aligned from start to finish, from the initial staffing action to pay request to pay receipt.
We are also redesigning the HR processes that are creating many of the pay issues employees are experiencing, such as transfers in and out, termination, and pay for acting positions. We are also looking at how work is organized so transactions can be handled more efficiently. For instance, at the pay centre, we have piloted a new approach that organizes compensation experts and support staff into pods that specialize in specific departments on transaction types. Early results are promising and suggest that this approach can help reduce our backlog.
There is no question that the previous government's decision to lay off 700 experienced pay advisers had massive consequences. We are rebuilding that capacity, and I want to thank the public service unions for their valuable support for our efforts. Last May, the government invested $142 million in capacity and technology. An additional $56 million in new funding is included in this year's Supplementary Estimates (C). The bulk of this funding is being used to add capacity to the pay centre and satellite offices.
We have provided a suite of measures for recruiting and retaining pay advisers to help us do the work that needs to be done. We have more than doubled the number of pay advisers since Phoenix was launched, and we continue to seek out new ways to serve our employees better.
My department has also partnered with Veterans Affairs Canada to set up new temporary pay offices to process transactions in Charlottetown and Kirkland Lake. From day one, our focus has been on helping employees, in marked contrast to the approach taken by Mr. Harper's Conservatives. That is why there will soon be 100 people in our client contact centre who will have access to Phoenix, which means they will be able to respond directly to employees calling about pay problems and provide them with more details.
Lastly, we are reinforcing our partnerships and mobilization. Opinions and feedback from the unions, departments, and experts in human resources, pay, and technology are essential for getting this right.
A union-management committee on Phoenix meets regularly to discuss problems and potential solutions. We also provide departments and organizations with monthly dashboards to better orient decision-making. We are committed to implementing lessons learned as mentioned in the Goss Gilroy and Auditor General reports so that we will never again find ourselves in this kind of situation.
We are going forward with these measures, but it will take time and concerted efforts across all departments. There is no easier quick fix for the problem to fix the system. To think otherwise would see us repeat the mistakes that got us here: poor planning, rushed analysis, and an overly narrow focus driven by savings not service to employees.
The well-documented history of this file provides the reasons why we are having this debate, but I am not offering it as an excuse. To be clear, we did not create this problem, but it is ours to fix, and we will.
As a responsible employer, we will do right by our employees. Nowhere is this better demonstrated than on the issue of training.
We may never know how many pay problems could have been avoided had the previous government made proper investments in training. I will let the former president of the Treasury Board Secretariat explain why training was not a priority for his government. Better training is a key solution moving forward, and we are also looking at other ways to help employees. One of the most vexing problems being faced is overpayments, more specifically, how repayments are being handled.
One of the particularities of federal tax law requires employees who were overpaid in one tax year to repay what they received plus tax withholdings in the following tax year. This is complicated and unfair for employees who are already under strain and stress. We are working with the unions to address the situation so we can ensure no employees are out of pocket because of pay issues.
Clearly, public service pay is complex and issues with Phoenix have only made things more difficult. Understandably, many employees want to know why we did not simply scrap Phoenix and implement a new pay system. We are drawing from lessons learned, expert advice, and are exploring longer-term options to ensure we have a sustainable, reliable, and efficient pay system.
While we explore other options, we must forge ahead on addressing the Phoenix pay system issues and backlog. Public servants deserve a modern, state-of-the-art pay system. Our immediate goal is to stabilize the pay system, but we are exploring longer-term options to ensure we have the system. We have to keep paying close to 300,000 public servants every two weeks, so we have no immediate choice but to bring Phoenix to a point of stability, where pay is being provided accurately and on time. This is my number one priority.
We will get through these pay problems, but there is much hard work ahead. As I have said many times, we will leave no stone unturned.
With regard to the motion at hand, our government supports the spirit of the motion. This being said, the motion contains elements that are factually inaccurate. The NDP claims that our government made a gross error in judgment in implementing Phoenix. This is not the case. The die was cast when the previous government sacked hundreds of compensation advisers and the previous pay system was slated for decommissioning. There was no system to go back to.
The NDP also states that the system was implemented against the advice of our employees. With all due respect, there is conclusive evidence that demonstrates officials advised in favour of moving forward with Phoenix.