OTTAWA – For the thousands of federal public workers who have ongoing pay issues, a grim diagnosis from Canada’s auditor general Tuesday: it’s going to be years before the government has a pay system that works.

Responding to the findings, the minister in charge is saying that the eventual pay system "may or may not" be Phoenix.

In an examination of the federal government’s rollout of the Phoenix pay system, the federal auditor concluded that Public Services and Procurement Canada — the department responsible for Phoenix — was slow to recognize the seriousness and depth of the problems plaguing the payroll system.

Now, it’s going to take years and cost more than the government had budgeted to find a solution.

"A sustainable solution will take years and cost more than the $540 million the government expected to spend to resolve pay problems," said Auditor Michael Ferguson in his Fall 2017 report tabled in Parliament Tuesday.

Public Services and Procurement Minister Carla Qualtrough told reporters Tuesday afternoon that she is looking into longer-term pay fixes that “may or may not result in Phoenix being the long-term solution.”

Phoenix 'only real option'

The Auditor General is recommending that Public Services get to the bottom of what it’s going to take to fix the problem; and work with the Treasury Board and the departments to come up with options and a cost estimate for a "sustainable pay solution."

The AG suggests a solution, when found, will need an implementation plan that includes clear accountability set timelines, and to do what the Phoenix rollout didn’t: make it jive with human resource systems.

In a press conference Tuesday, Ferguson said he thinks the government's best option is to stay with the current Phoenix program and not scrap it, as one public service union has suggested.

Ferguson said the options for software haven't evolved much since Phoenix was selected, making it the "only real option," to fit the massive public service’s various needs.

"If they started all over again it’s hard to see how they would actually end up in a better situation. I think at this point their only real option is to try and resolve the problem within the system as it exists right now," Ferguson said.

For now, the minister said she is committed to fixing Phoenix.

"We can’t take our eyes off the ball, we need to stabilize our current system… but to be very clear, we cannot defer any resources away from stabilizing. We have 300,000 people we need to pay every two weeks," said Qualtrough.

Number of pay issues quadrupled

The auditor general's office spoke with 12 of the 46 departments using Phoenix to pay their staff, evaluating the job Public Services did to fix pay problems and make sure public servants were paid correctly, and on time.

The audit found that after the department rolled out Phoenix in February 2016, it took the department four months to recognize there were serious problems, and it wasn’t until around a year later that they understood what the problems were. At first, the department thought it was an issue of managers incorrectly entering information into the system, though it has since become apparent the troubles are much more complex and included glitches and design flaws within the system itself.

The AG found that the number of public servants with outstanding pay issues quadrupled since Phoenix was launched. At the time the auditor general's examination concluded that more than 150,000 public servants had outstanding pay requests with Phoenix; about half of the 290,000 public servants currently getting paid through the system. Not all departments have begun to use Phoenix.

As of June 30, 2017, the amount of money tied up in unresolved pay errors totalled more than half a billion dollars, ($502 million). The total annual payroll for the government is around $22 billion.

Employees have been waiting on average more than three months to have their pay requests processed, with just under 49,000 employees waiting for more than a year, half of which have outstanding requests of high financial impact.

The report said as of March 31, 2017 Public Services and the departments using Phoenix to pay their staff spent $145 million fixing pay problems and they expect to spend another $395 million over the next two years, totalling $540 million.

This means the government will have to keep the $210 million in savings they were anticipating, and find an additional $330 million to go towards fixing the pay issues.

The auditor general said he is concerned that the cost estimate does not include the extra money that will be required to get it to work properly, meaning the final cost for the payroll system will be “much higher.”

The Australian example

In the report, the AG uses the Australian example — where the Queensland health department has spent eight years trying to fix a similar system. This ended up costing $1.2 billion.

Ferguson said it was a “missed opportunity” for the government to not take the lessons learned from this example, as the mess in Queensland was well evidenced before Phoenix went live.

Qualtrough has already recognized that Canadian taxpayers could be on the hook for about that much as a result of Phoenix.

On CTV's Question Period she said it is possible the fix for Phoenix will end up costing $1 billion. She could not say when the payroll system will be working properly.

Pay staff feedback

Public Services is now being asked to prioritize settling the outstanding pay requests, with regular reporting on the progress of that; and work with departments to improve input of pay information and better help employees resolve pay issues.

When the auditor general surveyed the employees at the pay centre in Miramichi, they reported that they had not received enough training to do their jobs properly.

So far the government has hired 1,400 employees to help with pay, more than the 1,200 let go by the previous government in advance of Phoenix’s debut. It has also set up satellite pay centres in Gatineau, Montreal, Winnipeg, and Shawinigan, to try to chip away at the pile of remaining cases, though the auditor general found that these steps have not reduced the number of cases.

The department has told the AG that it will have a preliminary HR-to-Pay integration plan completed by December 2017, and will provide a cost estimate for the Phoenix pay system by the end of May 2018.

Opposition response

Conservative Leader Andrew Scheer, joined by a handful of his MPs in the House foyer Tuesday, stopped short of suggesting the government scrap Phoenix, but criticized them for not yet presenting a substantive solution that is mindful of tax dollars.

"The system failure started when the Liberals pressed the start button," said Conservative MP Tony Clement, one of the key people responsible for Phoenix under the previous government.

Speaking to reporters, New Democrat MP David Christopherson called Phoenix a "boondoggle."

"From the start the Liberals have not taken this Phoenix fiasco seriously. They ignored calls from both public servants and unions to delay implementing the pay system and then failed to do anything to solve the problem," he said in a statement.

AG's Phoenix findings by-the-numbers

290,000: Federal employees the government has to pay regularly.

$22 billion: Annual payroll for the federal government.

80,000: Different pay rules that guide those payments.

200: Custom additions to Phoenix to handle those 80,000 rules.

494,500: Outstanding pay issues that needed to be resolved at the end of June.

150,000: Public servants who had an outstanding pay issue at the end of June.

$520 million: Total value of the pay issues that needed to be resolved at the end of June.

$540 million: Estimated spending over three years to fix Phoenix, a number Ferguson said he expects the government to blow past.

$1.2 billion: Cost over seven years it took an Australian government agency to resolve a similar pay system problem, an example Ferguson cites specifically in his report as an example of where Canada could end up.

62: Percentage of public servants who were paid incorrectly at least once during the last fiscal year, ending in March.

Source: The Canadian Press