A Senate committee wants to put the government on a tight leash when it eventually moves ahead with replacing the trouble-prone Phoenix payroll system.

The upper chamber's national finance committee released a report Tuesday recommending the government report to Parliament on options and costs for replacing the system, which has rattled Canada's public service for more than two years.

"We are not confident that this problem has been solved, that the lessons have all been learned," said Sen. André Pratte, deputy chair of the committee.

"And therefore, that's why we're asking for the government to report to Parliament before they make their final decision with what they'll replace Phoenix."

Sen. Andre Pratte wants more information from the federal government on how it plans to solve the failed pay system. 1:13

More than half of the roughly 300,000 people employed by the federal government have been hit by pay problems since the Phoenix system was introduced more than two years ago.

Workers have been overpaid, underpaid or not paid at all for months at a time.

The Treasury Board of Canada has been tasked with leading the search to find a replacement for Phoenix; the last federal budget set aside $16 million to fund the replacement.

The Senate committee blamed the Phoenix crisis on a systemic cultural problem within government that it said needs to be fixed before any kind of new or altered payroll system is selected.

"We are dismayed that this important project proceeded with minimal independent oversight, including from central agencies, and that no one has accepted responsibility for the failure of Phoenix or has been held to account," said the report.

"The government needs to move away from a culture that plays down bad news and avoids responsibility, to one that encourages employee engagement, feedback and collaboration."

Tuesday's report found federal pay advisers have not been trained adequately, increasing the likelihood that fixing the failed Phoenix pay system will take years and cost taxpayers billions of dollars.

"Instead of realizing $70 million in annual savings by centralizing pay operations, the government will incur approximately $2.2 billion in unplanned expenditures. By any measure, the Phoenix pay system has been a failure," says the report.

The report also calls on the Liberal government to set targets for processing outstanding pay requests.

Compensation

On Monday, the Canadian Press reported that the federal government is considering some sort of "tiered" compensation which would see every public servant get something for the stress Phoenix has caused.

Parliamentary Secretary to the Minister of Public Services Steven MacKinnon told CBC News Network's Power & Politics that his government is in discussions with public sector unions about compensating those affected by the fiasco.

"There are absolutely damages that will have to be paid, we acknowledge that. All public servants deserve some sort of redress for the situation that has been caused," he told guest host Catherine Cullen.

MacKinnon also said that blame for Phoenix should be laid at the feet of the previous government, rather than senior bureaucrats.

Parliamentary Secretary to the Minister of Public Services Steven MacKinnon responds to a new Senate report calling the government's handling of the Phoenix pay system debacle an "international embarrassment." 7:38

"Public servants are not the people who we should be looking to," he said. "These are political decisions. A political decision was made, squarely, in 2008 by the previous government, a political decision to book phoney savings, to cut public servants and essentially move to an unknown system, an unproven system."

Sen. Pratte said deputy ministers and senior bureaucrats had a major role in the rollout of the Phoenix pay system and someone should be held accountable.

"It was clear to us that it was a systemic cultural problem, because there were many people who saw the red flags who could have intervened and raised their hand and said, 'Well wait a minute, we have many signs that this will lead to a catastrophic problem,'" he said. "And yet, no one raised their hand and no one said, 'Wait a minute, we have to stop this.'"

Senator Andre Pratte on why a Senate report on the failure of the Phoenix pay system is calling the government’s handling of the issue an "international embarrassment." 4:04

The Senate national finance committee heard from 28 witnesses over eight meetings, including Auditor General Michael Ferguson, Privy Council Clerk Michael Wernick, union representatives, government departments and agencies and officials from IBM, the company hired to implement, operate and maintain Phoenix.

They also visited the pay centre in Miramichi, N.B.

Ferguson recently issued his own report on Phoenix, which called out an "incomprehensible failure" of project management and oversight.

The government has earmarked $431.4 million over six years to attempt to stabilize the existing Phoenix system.