Corey and David talk about the Phoenix Pay System and how it blew up in 2016 and how the government is still trying to fix it, even though it cost the taxpayer billions of dollars in lost revenue and millions in wasted money.
00:00:06.260So, you know, I guess just to give some background, people have heard of the Phoenix system.
00:00:11.120I read most of the book. I didn't get all the way through it quite yet.
00:00:14.040But part of it was, I mean, it wasn't even originally called the Phoenix system.
00:00:17.420But there was a big change that was happening kind of a little bit before Stephen Harper.
00:00:21.060And then it came in during Stephen Harper's time.
00:00:23.440This is one I don't even want to point at specific parties because it's had multiple parties in charge.
00:00:27.320And this disaster has kept rolling along. Give a bit of background, though.
00:00:31.580What happened? How did we get into this mess?
00:00:34.800It's a great question. We should talk about how the mess began.
00:00:38.120And then let's talk about when it blew up. And so let me explain first the word Phoenix.
00:00:43.460The mythical Phoenix is reborn from its ashes.
00:00:46.640So we need to ask from which ashes was this Phoenix project supposed to rise?
00:00:52.140And here's a quick history. A core operation of our federal government is to pay the public servants.
00:00:57.320And you would think that having to issue paychecks every two weeks, that they would be good at it by now.
00:01:02.840They're not. And so by Mulroney's term in office, it was apparent that our government had cobbled together a bunch of IT systems.
00:01:09.440It was difficult to maintain, difficult to keep up to date.
00:01:12.380And so in the last weeks of his term and when power was transitioning over to Kim Campbell, his government signed a $45 million contract with Accenture.
00:01:22.780The goal of that contract was to modernize the pension systems and the pay systems of the federal government.
00:01:28.660Now, of course, we know Kim Campbell didn't win that election.
00:01:31.480John Kretchen won that election and immediately he terminated the contract.
00:01:35.160And so nothing but ashes, you know, Accenture took us to court or took the federal government to court.
00:01:42.460There was a settlement. The Canadian public doesn't know the details of that settlement.
00:01:46.800But litigation took a decade. And so 10 years later, now we're talking 2004, 5, 6, the senior bureaucrats had renewed interest in the project.
00:01:55.200They estimated it would cost about $6 million, but the scope of it continued to increase.
00:01:59.820Stephen Harper's government then was persuaded to spend about $300 million to replace the payroll systems and to centralize the payroll staff into one single office.
00:03:58.500Yeah, and, you know, we saw it was frustrating to read it.
00:04:02.380For people familiar with Yes Minister, you know, it's an English sitcom about, you know, a minister getting snowed by his bureaucrats who were talking to him when things would fail and so on, and they would double speak.
00:04:13.480But some of those committee meetings, when they would talk to some of the, you know, asking about this, they just couldn't get any straight answers out of the senior bureaucrats on it.
00:04:21.600And I believe it was Foote who said at one point that she called it a success in the first little bit of a run.
00:04:26.540How could you have such a massive error rate and call it a success?
00:04:30.080Yeah, it's amazing the double think that you can read into the committee minutes.
00:07:02.320For example, why did Navdeep Bains step down?
00:07:06.360Why did Navdeep Bains' chief of staff suddenly become an executive at Dayforce?
00:07:12.020And why did the CEO of Dayforce tell reporters after the 2021 election, he told reporters that Justin Trudeau's cabinet had requested that Dayforce not publicize the fact that they had won the contract until after the election?
00:07:30.840It appears Justin Trudeau or one of his cabinet members specifically asked to keep that a secret during the campaign until after the election.
00:07:47.640And, you know, people always have to be careful.
00:07:49.120But when you get a government contract with that large amount of money and their history of bad controls on it, you know the opportunists are going to come out of the woodworks.
00:07:59.580So, I mean, whether Dayforce is right or wrong, it's not unprecedented for an organization to have a payroll this large in modern times.
00:08:09.260I mean, Canada, we've got a workforce of about 420,000, which is really huge for civil service.
00:08:15.040But still, there are a lot of companies and governments and others who have payrolls as large or larger than this.
00:08:21.660And are they operating more successfully than us?
00:08:24.120Well, if I could take a moment here, like we need to do this differently.
00:08:30.940Issuing paychecks every two weeks to public servants is a core operation of the government, as you said.
00:08:35.800And we're talking about basic math and well-known accounting techniques.
00:08:40.480Like this kind of software is not magic.
00:08:43.700The business rules, while complicated, and there are 80 plus collective bargaining agreements, and that certainly makes things more difficult.
00:08:50.760But the requirements are known and programmable.
00:08:52.840So, I believe, and so your question is, are others doing this better than the federal government of Canada?
00:08:59.980Some governments also have their own boondoggles.
00:09:02.280But I think it comes down to a simple question between lesser evils.
00:09:06.240The government could do this in-house.
00:09:08.440Certainly, the taxpayer employs an army of IT professionals and software developers.
00:09:13.720And they could build a purpose-built tool to operate this core operation of the government.
00:09:22.100Or the government could continue to outsource this stuff to giant multinationals who supposedly have the expertise, but they continue to fail.
00:11:07.320I mean, yeah, you know, kind of a funny comment out of Mr. Stanley, but he's probably dead right.
00:11:11.980He says, I bet the Phoenix employees still receive their pay on time.
00:11:15.240Yeah, when you're inside, you can make sure that your check comes through.
00:11:19.180But, you know, and I'm kind of bouncing around, but I'll bounce back.
00:11:23.060I mean, something you mentioned in the book, and it's interesting.
00:11:24.560When politics gets mixed into things, that's usually when the trouble comes about.
00:11:27.940So one of the things Prime Minister Stephen Harper did in his time was getting rid of the old boondoggle of the liberal gun registry.
00:11:34.840And part of that was they bought themselves love and mirror machine New Brunswick by setting up the administration offices there.
00:11:40.100So now they had to lay off loads and loads of civil servants who were running this terribly inept gun registry.
00:11:46.680Harper thought he could kill two birds with one stone and said, well, we will re-employ them with this new payroll system.
00:11:53.460So they took those bureaucrats and just kind of shuffled them into something they weren't necessarily qualified to embrace.
00:11:59.120But it was a way to patch a hole and try and maintain a seat.
00:12:01.480And it's, you know, this is just typical of governments, unfortunately.
00:12:07.100Well, I think any other Prime Minister might have made the same calculation Stephen Harper did.
00:12:11.720If the goal was to centralize this operation into one office, there were just a few offices across the country that were suitable for this with available staff.
00:12:21.800So I don't begrudge his decision on that point.
00:12:24.380But it also is interesting to note that it takes about two years for the payroll staff to be properly trained so that they can conduct this work.
00:12:51.900So of all the people that start the process to learn how to become a payroll advisor in our government, only about 40% of them continue the training.
00:13:00.580Two years later, 60% of them have quit and left.
00:13:03.400And so that speaks to the difficulty of the job, but also the nightmare that is this work environment.
00:13:13.380I mean, if you have a high turnover, then you're not going to have offices with long-term experienced people to apply themselves to issues.
00:13:20.680But I guess if you're applying yourself and you can't fix anything, that's how you end up burnt out.
00:13:24.440What's interesting, if I could add, Corey, to that point, the solutions, the best.
00:13:30.660So if we look at how the government has burned through the errors that have occurred, and we look at how have they done that most effectively, it's usually that a small group of experienced people have come together.
00:13:43.200They work together as a pod, and they burn through a backlog of errors, and they fix them.
00:13:48.920The solution here is people, not some belief in some magical system that we can buy from a multinational corporation.
00:13:58.980Well, there's not going to be any quick magic bullet, that's for sure.
00:14:02.220And, I mean, that's part of why you've written a book on it.
00:14:05.040The time has run out quickly because it's such a big issue here.
00:14:07.760But I'm certain you're going to continue to watch this and be speaking on it.
00:14:11.560So where can people find your book, and where can they find you to keep up on what's going on as, hopefully, this government or the next government gets on to solving this issue so they can move on to solving many others?
00:14:46.060Well, thank you for taking the time to join us today and for watching this issue and digging into it.
00:14:50.560Like I said, you know, some of these things seem kind of dry, and they're bookkeeping sort of things and stuff like that.
00:14:56.180But, boy, it's not so dry and unimportant when you're the one whose check hasn't shown up on time or, you know, when you're working in a department that's spinning its wheels and burning you out.