THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Wednesday, April 3, 2019
The Standing Senate Committee on National Finance met this day at 6:45 p.m. to study the government response to the thirty-second report of the Standing Senate Committee on National Finance, entitled The Phoenix Pay Problem: Working Toward a Solution.
Senator Percy Mockler (Chair) in the chair.
[Translation]
The Chair: Good evening, honourable senators.
[English]
My name is Percy Mockler, a senator from New Brunswick and chair of the committee. I want to take this opportunity to welcome all of those who are in the room and viewers across the country who may be watching on television or online.
As a reminder to those watching, the committee hearings are open to the public and also available online at sencanada.ca.
[Translation]
I will now ask the honourable senators to introduce themselves, starting on my left.
Senator Forest: Good evening. My name is Éric Forest, and I am a senator from the Gulf region in Quebec.
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Senator Klyne: Mary Klyne, Saskatchewan.
[Translation]
Senator Dalphond: My name is Pierre Dalphond, and I am an independent senator from Quebec.
Senator Pratte: André Pratte from Quebec.
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Senator Omidvar: Ratna Omidvar, Ontario.
Senator Duncan: Pat Duncan, Yukon.
Senator Andreychuk: Raynell Andreychuk from Saskatchewan.
Senator Boehm: Peter Boehm, Ontario.
[Translation]
Senator Forest-Niesing: Josée Forest-Niesing from Northern Ontario.
[English]
Senator Eaton: Nicky Eaton, Ontario.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
Senator Neufeld: Richard Neufeld, British Columbia.
[Translation]
The Chair: I’d also like to introduce the committee clerk, Gaëtane Lemay, and our two analysts Alex Smith and Shaowei Pu, who team up to support the work of the Standing Senate Committee on National Finance.
[English]
I would like to take this opportunity to say thank you, minister, for accepting our invitation. I will also introduce your parliamentary secretary, Mr. MacKinnon.
Honourable senators, today we are meeting to consider the government response the committee received to its report entitled The Phoenix pay problem: Working Toward a Solution. Our report was tabled with the Clerk of the Senate on July 31, 2018. It was adopted by the Senate of Canada, with a request for a government response, on September 25, 2018. The response was tabled with the Clerk of the Senate on February 22, 2019, the same day it was circulated to all members of our committee.
Honourable senators, to discuss the response of the government, we are pleased to welcome the Honourable Carla Qualtrough, P.C., M.P., Minister of Public Services and Procurement and Accessibility. Accompanying the minister, we have Parliamentary Secretary Steven MacKinnon. Thank you for accepting our invitation and for being here this evening.
Welcome, minister. Thank you on behalf of the committee. It has been approximately a little over one year that you were here and made a presentation to our committee. We understand that you are available only for the first hour of our meeting, but you are being accompanied by your officials and they will stay with us to complete this session.
Also accompanying the minister, we have Les Linklater, Associate Deputy Minister, HR-to-Pay Stabilization, Public Services and Procurement Canada.
[Translation]
From the Treasury Board of Canada, we have Jacquie Manchevsky, Corporate Secretary, Next Generation HR and Pay Team, Office of the Chief Information Officer.
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I have been informed by the clerk, minister, that you have comments to make.
[Translation]
The floor is yours, Minister.
[English]
Hon. Carla Qualtrough, P.C., M.P., Minister of Public Services and Procurement and Accessibility: Thank you. Chair and committee members, good evening.
I would like to start by thanking the committee for the work you have done to prepare your report on the Phoenix pay system. I think we can all agree that the ongoing pay issues remain completely unacceptable, and our government deeply regrets how it is affecting the lives of public servants.
[Translation]
I would like to assure the committee that we continue to take action on all fronts so that employees get paid accurately and on time.
[English]
We are here today to provide an update on the significant steps the government is taking to resolve these pay issues in line with the recommendations in your report.
Regarding your first recommendation, the government has prioritized processing of specific types of pay requests, and this has shown results. In 2018, parental and disability leave requests were processed within service standards 91 per cent of the time, and students 79 per cent of the time.
[Translation]
We have also put in place specialized teams to process cases for employees who have been most impacted, such as nurses and ships’ crews. And we are improving processes for transfers in and out, terminations and overpayments.
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As you are aware, we have established a new service delivery model to process pay transactions. This approach, known as Pay Pods, makes more efficient use of resources, processes pay transactions more rapidly and improves client service.
The Pay Pod model, a Pay Centre employee initiative, groups together compensation advisers and assistants assigned to specific departments and agencies served by the Pay Centre. These teams work through the backlog and address outstanding cases in an employee’s file. This is in contrast to the previous approach, which was to address pay issues by transaction type.
The Pay Pod model has two main benefits. First, advisers in Pay Pods handle employee files holistically, ensuring that all of the issues in a file will be addressed over time.
[Translation]
In addition, Pay Centre employees develop collaborative working relationships with departments, allowing for quicker resolution of pay issues and the development of greater departmental expertise.
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Attention is also focused on data quality and timeliness, which prevents new pay issues from emerging.
Currently, 34 departments and agencies representing approximately 154,000 employees, or 70 per cent of Pay Centre clients, have transitioned to the Pay Pod model. We are on track to have all 46 departments served by the Pay Centre using the Pay Pod model by next month, May 2019. These efforts are showing positive results.
Since January 2018, we have decreased the number of transactions waiting to be processed at the Pay Centre by 196,000. This represents a reduction of the overall queue by 31 per cent.
We are also working with the private sector to provide innovative solutions in six areas identified as key in achieving pay stabilization: automation, HR processes, reducing the queue, improving user experience, enhancing user access management and training.
On that note, I am pleased to highlight that Public Services and Procurement Canada awarded individual contracts to two separate suppliers in March 2019. Over a two-month period, both suppliers are expected to design and propose solutions to automate manual pay processes. The supplier that proves their design can successfully resolve pay cases will have a contract extension of six months to plan for implementation.
The use of automated services to process manual transactions, such as confirming accuracy and completeness of data entry, will reduce errors and the time required for data entry in the pay system. This will allow compensation staff at the Pay Centre to focus on more complex cases and address more cases in the queue.
Additionally, regarding procurement for the next generation HR-to-Pay system, we have evaluated vendors on the Invitation to Qualify Gate 1, and three of them have moved to Gate 3 of the procurement process.
Mr. Chair, let us now turn to the committee’s second recommendation regarding training and tools for pay employees.
[Translation]
The government has taken serious measures to ensure that compensation advisers and employees working on HR-to-pay stabilization efforts are provided with the appropriate tools and training to succeed. We have put in place a new training program for compensation advisers, which includes additional training time on the Phoenix system. This training is now targeted to specific tasks, such as terminations, new hires and acting assignments.
[English]
In addition, we are also working on a Train the Trainers program to be delivered by the Canada School of Public Service, and have increased the number of Phoenix coaches from seven to more than forty since the implementation of Phoenix. There is also mandatory online training for all employees, managers, HR professionals and compensation advisers on their respective roles regarding pay issues.
Mr. Chair, we have also significantly increased our capacity to address pay issues.
We have reinstated the several hundred positions eliminated by our predecessors and further invested to nearly triple the number of staff processing pay at the Pay Centre and in satellite offices around the country. There are now approximately 1,500 employees working on pay operations, including more than 800 employees at the Pay Centre in Miramichi, and approximately 700 employees in our regional offices. This increased capacity is helping us work through the backlog of transactions.
[Translation]
We have also increased the number of employees at the Client Contact Centre. We now have 200 agents available to help public servants. In addition, the Client Contact Centre employees provide first point of contact resolution service to manage simple transactions and provide answers and information to employees.
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These changes have increased overall client satisfaction. Callers report that they are getting the information they need, and 82 per cent of clients confirm their inquiry was addressed.
Mr. Chair, regarding the third recommendation, the Office of the Comptroller General will lead an exercise to provide Parliament with the government’s total expenditures associated with the Phoenix pay system on an annual basis. The results will be reported in the Treasury Board Secretariat’s departmental results report.
As for the fourth and fifth recommendations, work has already begun to move away from Phoenix and begin development of the next generation of the federal government’s pay system. We also acknowledge that some organizations have complex pay rules and that alternative pay solutions need to be explored.
As announced in Budget 2018, the Government of Canada has set aside $16 million over two years, beginning in 2018-19, to identify a way forward. In May 2018, Treasury Board approved funding of $16 million to establish a temporary, dedicated NextGen HR and Pay team.
This team, under the government’s Chief Information Officer, will work with experts, federal public sector unions and technology providers to undertake the initial planning for a new federal government pay system. This initiative is expected to come up with recommended options no later than June of 2019.
This process includes a broad engagement strategy, led by the Chief Human Resources Officer, of users, departments, specialist communities, industry, unions and senior government officials.
[Translation]
It should be noted that the engagement also includes departments with complex needs and secure environments. Our goal is to ensure that an alternative HR-to-pay solution addresses enterprise-wide pay needs. In the interim, the government will continue its current efforts to stabilize Phoenix, before transitioning to a next-generation solution for HR and pay.
[English]
Those stabilization efforts include processing more than $1.6 billion in retroactive payments for employees, working with Canada Revenue Agency and Revenu Québec, to ensure that employees are provided with accurate tax slips, as well as offering flexible repayment options for employees who have received overpayments.
In the longer term, our government is moving forward with legislation that would, under certain conditions, allow employees to repay to any public or private sector employer only the net amount of an overpayment rather than the gross amount. Until this legislation is in place, CRA has already put these provisions into place for people affected by Phoenix.
Mr. Chair, as further proof of the government’s commitment to addressing this situation and to continue to follow up on your recommendations, I would like to inform the committee that Budget 2019 provided an additional $21.7 million in 2018-19 to address urgent pay administration pressures.
It also proposes to invest an additional $523.3 million over five years, starting in 2019-20, to ensure that adequate resources are dedicated to addressing pay issues.
This new funding will help in three ways. First, it will maintain the increased capacity that PSPC built up for processing pay transactions, including Pay Pod implementation.
Second, it will support and expand ongoing technical assistance and support system improvements to reduce the likelihood of errors occurring in the first place.
Finally, it will support and improve vital work on human resources and pay process redesign, oversight, governance, change management and stakeholder engagement.
We are committed to making the situation right for public servants and their families.
To conclude, Mr. Chair, while we still have much to do to help employees in need, we continue to see progress from our ongoing actions. We want to assure you that the government will continue to work hard to resolve issues and stabilize the system until every public servant is paid accurately and on time. It continues to be our number-one priority.
Thank you. We look forward to questions from the committee.
The Chair: Thank you.
Senator Marshall: Welcome, minister, to you and your staff.
You spoke about the Pay Pods. Several members of the Finance Committee visited Miramichi last year, about 11 months ago. The Pay Pods were just coming on stream then. Could you elaborate on the implementation of the Pay Pods?
I would have thought they would have all been implemented by now, but in your opening remarks you said that 70 per cent of the clients are covered now by Pay Pods transition and that next month the other 30 per cent will be in Pay Pods.
Why did it take a year? I would have thought it would have happened faster. I’m surprised that it will be done by next month. If you could just talk about that, because I am very interested in that.
Ms. Qualtrough: I can. Thank you, senator, for the question.
When the Pay Pod concept, which was suggested by employees in Miramichi, was rolled out, we wanted to make sure that it would work. Lesson learned: you don’t just hit a button and hope something magically works. We took the time to ensure proof of concept, so that Pay Pods would yield the results we expected or suspected that they would.
Second, that the departments themselves were ready to be in the position to successfully implement the Pay Pod, meaning that some work had to be done internally in certain departments that had more complex pay issues and more antiquated or complex HR systems. Again, we wanted to set them up to succeed.
In working with departments and all the different agencies the Pay Centre served, a rollout plan was developed where departments were identified as being ready, being close to ready, and a system of rolling out the pull model was implemented over the period of 16 or 17 months, the final wave to go out next month in May.
We are seeing incredible results from this. I can tell you that pod zero, as we call it internally, which was the first pod in November or December of 2017, has reduced its queue by 50 per cent. That would be Veterans Affairs.
Les Linklater, Associate Deputy Minister, HR-to-Pay Stabilization, Public Services and Procurement Canada: Also Innovation, Science and Economic Development and the federal development agency for southern Ontario.
Ms. Qualtrough: Thank you. I don’t know all the departments and all the pods. I apologize.
It has been very interesting, because as pods have come online and as teams have started to gel, we’ve seen some really good results. As I said, just in the past year we’ve reduced the overall queue by 31 per cent, but in the early-adopted pods that’s up to 50 per cent in some cases.
Senator Marshall: When we visited last year, it was in the early stages, but the results were very promising. I would have thought that everyone would be on track by now, but you’re saying you take a transition and that you had to make sure the departments and agencies were ready to adjust to the new pods.
Ms. Qualtrough: That’s exactly what I was saying. Part of it was that some departments were keen, eager and ready to successfully implement a pod, and some had more internal work on their own processes and HR practices that had to be done before they could be in the pod model to get the best out of it.
Senator Pratte: Welcome, minister, again, to our committee. When I look at the dashboard, I see the number of financial transactions beyond the normal workload has continued to go down slowly, but it’s going down; so that’s good news. The data I have here dates from February. I don’t know if there’s more recent data.
Mr. Linklater: Yes.
Senator Pratte: Would you provide that data to us?
Ms. Qualtrough: We did release a dashboard today. Literally at three o’clock today the next dashboard came out. Les can give you those numbers.
Mr. Linklater: Certainly. As of March 20, the financial transactions beyond normal workload had continued to decrease to 248,000. The total of outstanding transactions, 437,000 at the Pay Centre.
Senator Pratte: There is a trend. If I remember correctly, the trend is an improvement of between 10,000 and 15,000 each month in the financial transactions that are beyond the normal workload. Is that a trend that you expect to continue? Everyone hopes it will continue, but at that speed so we could achieve the target of zero in 15, 17, 20 months? Is that what you expect?
Mr. Linklater: We have seen a sustained decrease, as the minister alluded to in her remarks: almost a third reduction over the course of the last 15 months. As we on board the last group of departments into pods, we would expect a bit of acceleration as they work on that model. At the same time, we are also looking at alternative or different options to help further improve our automation through the innovation requests for information that the minister spoke to as well.
We would expect the trend to continue, as we’ve seen over the last number of months. It’s fair to caution that there are seasonal adjustments, whether it’s the end of the fiscal year, the summer student hiring season, the end of the calendar year, to align with budget and budget allocations, and we often see little spikes at periodic times during the year.
Senator Pratte: The data for February 20 that I have here indicates that 52 per cent of transactions were processed within service standards. Do you have a more recent number for me?
Mr. Linklater: I do. It’s 53 per cent.
Senator Pratte: It’s about the same thing.
Mr. Linklater: If I could, as we work through the backlog and the age of the transactions varies, depending on what’s being worked on at any given time, that number will fluctuate until we get to a stable state.
Senator Pratte: Would you remind us what “within service standards” means?
Mr. Linklater: Normally at the Pay Centre it’s within 20 working days.
Senator Pratte: That means the moment a transaction arrives —
Mr. Linklater: In the Pay Centre, until it’s dealt with, 20 working days.
Senator Pratte: That means the other 50 per cent that are outside service standards have to wait quite a long time before their transaction is dealt with.
Mr. Linklater: Right. As I said, this global total would take into consideration transactions that may have been waiting for more than a year or longer, having been in the backlog.
With the pod model, the idea is that nothing new ever gets old. The first order of business for the pods is to deal with all of the new incoming volume during a pay period, and then with the spare capacity during that two-week period to focus on the departmental priorities that are articulated for the pod. These could be the oldest cases or the cases with the most financial impact, depending on the individual department’s circumstances.
Senator Eaton: The 248,000, if I’m a public servant, I get paid, I have a problem, I end up in a Pay Pod that fixes me, can it happen again? Once you’ve fixed me once, does that mean it’s clear sailing for my salary forever, or does it mean a month later I could be in a bog again?
Ms. Qualtrough: If you were made whole, that means in that 248,000, we have dealt with all your current and outstanding issues. You might have four things — you acted, you went on vacation, you didn’t get paid one time — so you are whole as of that moment. If there is a next time something happens, you won’t have to deal with six backlog ones; you’ll have to deal with the one.
Senator Eaton: But it could happen again.
Ms. Qualtrough: Yes. We don’t like to think that it will, and we have a lot more confidence in the software as a system.
Senator Eaton: And the training.
Ms. Qualtrough: If you look at the number of transactions we’re receiving in a month, it’s not what it used to be because we’re not seeing the number of errors. A chunk of this is chipping away at the backlog, not getting new transactions.
Senator Eaton: It could happen, but it’s unlikely?
Ms. Qualtrough: I don’t know if I would as far as to say “unlikely.” I would like to hope it’s not likely.
Senator Eaton: If I’m backlogged for a year, do I get interest on my unpaid salary?
Mr. Linklater: No.
Senator Eaton: In the new system, in the NextGen situation, I remember we heard about the Coast Guard nurses, departments that have very different pay problems or criteria. In the NextGen, will every department have its own system?
Ms. Qualtrough: You’ll appreciate the new system is a Treasury Board lead, so I’ll ask Jacquie to give the details. One of the lessons we’ve learned is that we can’t take a cookie-cutter approach to pay. Departments and agencies are too diverse with their pay situations and circumstances, to your point.
Senator Eaton: It was your point when you came before the committee last time.
Ms. Qualtrough: Yes. A corrections officer versus an administrator at DND, they don’t have the same collective agreements or work realities. One of the key priorities for the NextGen system will be to acknowledge and address that.
Jacquie Manchevsky, Corporate Secretary, Next Generation HR and Pay Team, Office of the Chief Information Officer, Treasury Board of Canada Secretariat: That’s absolutely fair. In fact, what we are in the process of doing in the Next Generation HR and Pay system is working closely with vendors in a very open and agile process to run them through the gamut of payrolls. We want to ensure it will not just be for an acting or retro or back pay, but has the complexity of shift work or when someone is on a ship in DFO and isn’t able to report overtime or acting in real time. We are working closely with vendors to make sure that the simple rules — which aren’t quite that simple — as well as the complex, that the calculator will be able to take that into account and spit out the right number.
[Translation]
Senator Forest: Thank you for appearing before the committee, Minister. Your being here is important given how serious of an impact this issue is having on what I consider to be the most valuable resource of an organization: its staff. Many have suffered.
You said the number of outstanding pay cases had dropped by 31 per cent, or 437,000 cases. Does that number take into account the fact that some organizations have pulled out of the system? In other words, does it represent a decrease that is somewhat artificial?
Mr. Linklater: If I understand your question, you are asking whether the fact that organizations can pull out of the system is being taken into account.
Senator Forest: Yes, if organizations do pull out.
Mr. Linklater: To date, no organization has pulled out of the system. We are working with the Senate so that it can exit the system by the end of 2019. For the time being, though, we continue to process transactions for Senate staff.
Senator Forest: The 31 per cent, then, reflects an overall decrease.
Mr. Linklater: Yes, overall.
Senator Forest: My next concern has to do with compensating employees who have been financially hurt. Employees have incurred interest charges and other expenses because of this fiasco, not to mention the social toll it has taken on them. Have you set out clear criteria, guidelines or policies for compensation? The documentation shows the amounts that have been invested in the Phoenix pay system, but makes no mention of an employee compensation policy.
[English]
Ms. Qualtrough: I’d say there are two aspects to your question, if I understand. On the one hand, employees can make claims for out-of-pocket expenses incurred as a result of — I don’t want to verbalize it, but being “Phoenixed.” It’s a word. For example, you can claim up to $200 for a tax expert to help you prepare your return because you’ve had consequences to your taxes.
In terms of damages, akin to pain and suffering, that’s currently at the negotiation table between unions and Treasury Board Secretariat as the employer. I don’t know the details, nor would it be appropriate for me to share them if I did, but I know there are ongoing negotiations between unions and the employer to address the emotional consequences that you spoke to, of having gone through these experiences.
[Translation]
Senator Forest: Negotiations are under way, then, between Treasury Board and the unions.
Ms. Qualtrough: That is correct, between Treasury Board and the unions.
Senator Forest: I have one last question. It’s about accountability. Are the people responsible for this fiasco going to be held accountable for their actions and decisions?
Ms. Qualtrough: Yes and no. At the end of the day, this experience was a real eye-opener for the government.
[English]
— the oversight that was lacking as Phoenix was initially implemented. Nobody has been fired. That said, nobody who was initially at the senior level of Phoenix is working on Phoenix any longer. There is now a DM oversight committee. There are accountability measures built into a DM’s performance. There are performance indicators for the deputy ministers around Phoenix.
Les, can you expand?
Mr. Linklater: I would say that the Goss Gilroy report fairly laid out the considerations that went into the failure of the project. There was a lack of significant oversight. There was a failure of project management and, I think importantly, the engagement of the users to be able to define a product that was going to work in the circumstances.
Senator Neufeld: Thank you for being here, minister.
In your notes to us, you say that you’re beginning the process of moving away from Phoenix, which we understand, and into a new system. As I understand, you’re under the government’s Chief Information Officer.
Can you explain to me why it’s the government’s Chief Information Officer who is heading this up? Will that be in place all the way through, or does it transfer to some other department or entity afterwards?
Ms. Qualtrough: Initially it was well thought out that PSPC should be in the business of stabilizing the existing system, that our focus as a department needed to be squarely on stabilizing Phoenix, and none of our resources or attention could be diverted onto something new.
We also knew that as unsuccessful as Phoenix was, it was procured in 2007. So this system, even if it was working at its maximum capacity today, would have to be replaced. We live in a completely different technological reality. We would be looking into maybe a cloud-based model or a service for software, a completely different type of procurement in any event.
Treasury Board, as both the employer and the agency responsible for digital government and our new approach to IT procurement — Jacquie, am I doing this justice? There was a lot of thinking that went into making Treasury Board the lead and, through Treasury Board, the Chief Information Officer.
What we’re procuring here is an HR-to-Pay system. It’s actually bigger than a pay system. It’s an HR system as well. Jacquie can expand on that.
Ms. Manchevsky: While Alex Benay, the Chief Information Officer for Canada, is the lead, we actually work in partnership with the Office of the Chief Human Resources Officer, who is in fact in Treasury Board but is the policy owner for human resources and human resource policy.
As Minister Qualtrough has explained, this isn’t just a pay system. In fact, we will be looking at a system that goes all the way from — we say hiring to retiring — hiring to leaving and, throughout that, the pay.
While, as I mentioned, Alex is the lead, we do this in concert. It’s actually a team. The NextGen team is small but mighty and is in fact a multidisciplinary team of both digital experts and human resource policy experts.
Another important lesson that we learned was that the tech can’t push the policy, but that the policy actually also needs to push the tech. That’s how we work closely in collaboration and how we hope to have a system that is able to deliver on not just the rules of today, our payrolls and policies, but one of the future as well.
Senator Neufeld: Thank you. I’d like to ask you a question on another matter, minister. We don’t often have the luxury of having a minister here.
In February you said it was your understanding that when criminal proceedings are ongoing, the option of a deferred prosecution agreement is always available. In light of those comments, can you tell us if the DPA is still on the table for SNC-Lavalin and, if so, why?
Ms. Qualtrough: I think I stand by what I said in February. My understanding is that until the point of criminal conviction, it is open to a prosecutor to avail themselves, as circumstances change and as they evaluate the situation of a DPA, and that remains my understanding in any situation.
Senator Boehm: Minister, thank you for being with us. I’d like to follow up on something that my colleague Senator Pratte asked you. I just wanted to say that as a former deputy minister before I came here, I was part of many discussions on Phoenix and how to get out of it. I’m aware of the opportunity costs all the way through the management system as we look after our employees, because they have concerns and they take those up the line.
In particular, on client service and client service standards, the Pay Pods have come in. There’s the 20-working-day element that Mr. Linklater mentioned, but is there a system where someone who is phoning in or making a request will get an immediate response and be able to speak to a person? I ask that in particular with respect to the two most vulnerable groups, as I see them. They are the young, those who are coming in and want to join the largest employer in our country, the public service of Canada. There are students who come in, many of whom do their entire summer work term or have done it and don’t get paid until much later. Then there are those who are retiring, who worry about their severance and pensions and when that will kick in.
Being an Ottawa-based senator, I get these questions when I’m in the grocery store and when I’m in the LCBO. Not as often in the latter case, but I do get those.
In terms of service, you want to provide incentives to employees. You don’t want a disincentive for the young who might want to join the public service. Could you talk about that?
Ms. Qualtrough: That’s a really important question. It really impacts employee morale, employees looking at their future in the public service and their decisions to stay in the public service.
For awhile, we heard a lot of employees hesitant to take acting positions because they worried that would mess up their — that’s a horrible position to be in, that you can’t take an opportunity to take a senior role in your organization because it might impact your ability to pay your mortgage. We don’t hear that as much anymore.
What we have through our Client Contact Centre is it used to be a model where someone could call in, basically lodge a question, get a ticket, and someone would call them back. It was very dissatisfying to clients because they weren’t getting any kind of resolution.
The Client Contact Centre has been completely overhauled, and now client contacts and our personnel have access to people’s files and can resolve basic issues on the spot for them.
There is an 82 per cent satisfaction rate with Client Contact Centre service provision. Employees are very satisfied with the service they get. Even if someone can’t resolve their issue at first blush, they have talked to someone; they know they have been listened to; the type of case or problem they have has been identified.
Our moving to the model where Client Contact Centre employees have access to people’s pay files has completely changed the customer satisfaction experience for public servants.
Senator Boehm: Are you looking toward standardized practices other than the 20 days, recognizing what you said earlier about different systems and unions and different departments and agencies? For example, if someone calls in or sends an e-mail, could you say, “Okay. You’re going to get some sort of a response or an acknowledgment within five working days”?
Ms. Qualtrough: Right.
Mr. Linklater: As part of our escalation process, for most severe cases there is that service standard of 10 working days for a response or return of a call. In addition to the Client Contact Centre, we have been working with departments and agencies to improve the exchange of information to nip problems in the bud and to be more proactive.
When Phoenix first went live, there were hundreds of people every pay who weren’t getting any pay or very low pay. That doesn’t happen as often now because when those situations arise, we are now running reports to be able to advise departments in advance of payday that individuals will be affected by a low pay or a no pay. They can then proactively offer emergency salary advances or priority payments to be able to ensure people get the money that they are expecting on the day they expect to get it.
We are also ramping up a group to be able to focus on escalation cases, the very tricky and the older cases where there may be, as the minister was saying, four or five issues related to an individual which are causing severe financial hardship, including severance. We are looking very clearly and closely at providing a prompt response to those individuals.
The Chair: Thank you.
[Translation]
Senator Forest-Niesing: I gather that the debacle had a lot to do with the operating culture, in terms of management, communications and so forth. I am, however, relieved to find out that the changes you are proposing and the performance measures you intend to put in place will help bring about a significant and necessary shift in the operating culture. Thank you for that.
In response to the first recommendation, you said that Public Services and Procurement Canada had established a list of areas for priority processing, mainly cases involving parental and disability leave as well as students. Given the number of affected employees, what criteria have you put in place?
Ms. Qualtrough: The priorities you mentioned have already been discussed.
[English]
It was an agreed-upon list of priorities between staff and unions. Unions identified the things that were most worried about are disability and maternity, so could you please focus on nothing else but these two things. From the very beginning, those two were priorities. Unions remain committed to having those as the number one and two priorities. That’s why, for the past two years, those two things have been our priorities. Discussions between staff and union ended up at that point, I think.
Mr. Linklater: That is correct.
[Translation]
Senator Forest-Niesing: The second recommendation addresses the need for better training. I was looking carefully at the measures you’ve taken, especially the training program for trainers. The practice has proven successful in other areas. Could you tell us more about it and the results you expect to see?
Mr. Linklater: Absolutely, and thank you for the question. Since Phoenix was rolled out, we’ve tripled the number of pay employees across the country. As the minister mentioned, we have 800 employees at the Pay Centre in Miramichi and 700 employees in regional offices across the country, including in Edmonton, New Waterford, Halifax and Shediac. With people all over the country, we had to make sure staff were being trained and managed properly. We invested in the training of coaches, people who are in charge of special cases as well as providing advice and assistance to those dealing with complicated cases. Attention is also paid to making sure the workload of all joint teams is well-managed.
In cooperation with departments, we’ve trained employees in other government departments and partnered with the Canada School of Public Service. Our Train the Trainer program has produced good results. We started out with seven trainers and now have 40. Making sure people are qualified to deliver the required training is time-consuming. We have to make sure they are able to address needs and questions that come up. We are pleased with the program’s success, but we need to keep investing on this front.
[English]
Senator Andreychuk: Minister, thank you for coming to the committee. I have two questions. I’m not sure if you’ll be able to answer them, but perhaps you can give the answers in written form.
I understand that employees, or at least we have been told, might be able to embark on a civil action or a court action for any harm caused to them, but it has to be a team effort. In other words, not individual. It would be through the union, if I’m correct on that.
If that is the case, why, when in fact there may be some unusual harm to an individual? Am I correct, first of all, and is it precluded because of union contracts or otherwise?
Ms. Qualtrough: I think it’s a function of the union space. You have to first file a grievance. It then goes to the union, and then it goes to the PSLRB, the Public Service Labour Relations Board. Sometimes I don’t remember what these acronyms stand for. There is kind of a parallel process to the court system established for the union that I think precludes taking civil action, but I don’t know that for sure.
Mr. Linklater: For represented staff.
Senator Andreychuk: That’s what I’m getting at. This is going to be treated like any other grievance. It not allow for an unusual situation.
Mr. Linklater: In fact, my understanding is that Treasury Board Secretariat as the employer has received thousands of individual grievances that are being held in abeyance for individual harm as we work through some of the issues with stabilization, but there are policy grievances as well that have been filed around collective agreement implementation.
Ms. Qualtrough: Then, of course, there are the ongoing damages negotiations that would try to address some of that.
Senator Andreychuk: Okay. Just following up on the Next Generation team, $16 million over two years, and this is obviously a start for the way forward. Is there any way we can start mapping the costs? Are you doing that? We still haven’t figured out what the costs are for the problems, and it’s a real issue. What is this really costing the government and employees? We don’t want to get ourselves into that same situation the next time around.
I understand this is just $16 million to set up a team for two years who will be having the same discussions that I think we had before. We don’t want to fall into the same trap. Is there any way we can be apprised of how you’re going about it and what the costs are so that we can do our job in oversight?
Ms. Qualtrough: We can absolutely commit to that. Again, lesson learned. Part of the challenge for us even now is that nobody tracked the cost of the system before Phoenix, so even to compare it against the former system is hard to do. We definitely hear you on this.
The NextGen in two years — it’s taken a lot less than that. They are ahead of where they thought they would be now after one year. It’s a procurement that is ongoing. It’s not just doing a functional analysis of needs. It’s an ongoing, agile procurement where suppliers and vendors are currently engaged. They are going through different gates that I’m sure Jacquie can explain to you, the idea being that there will ultimately be a system at the end of this. This won’t be two years where people are sitting around talking about what we need and then there will be procurement. The procurement is actually happening now.
The Chair: Looking at the time frame and the minister’s agenda, can I ask Ms. Manchevsky to please respond in writing?
Ms. Qualtrough: She will be here for the next hour, senator.
The Chair: Okay. Before you go, minister, I have four senators who would like to ask questions.
Senators, if you could each ask one question, we could ask the minister to respond to the committee in writing through the clerk with the questions asked.
Senator Klyne: I have one question with two parts. Thank you, minister.
I assume that these Pay Pods are functioning on the backbone of the original and improving system. Is that correct?
Ms. Qualtrough: Yes.
Senator Klyne: Recently, two separate suppliers were contracted to come up with design solutions for manual pay to automated pay. The one who wins — it’s an interesting competition — will get an extended contract. Are either one of those, either the original off-the-shelf designer or the subsequent customizer of that off-the-shelf?
Mr. Linklater: No.
Senator Omidvar: Thank you, minister, for being here. I’m one of those who think that working for the federal public service is a badge of pride. Federal public servants are to be admired and commended for their work. But then they get “Phoenixed,” a new word I learned from you today.
Ms. Qualtrough: I apologize.
Senator Omidvar: I am wondering if your hiring reputation has taken a hit and whether you have experienced challenges in the recruitment of talent as a result of this. Nobody wants to work, even for the best employer, if they don’t get paid.
The Chair: Thank you, Senator Omidvar. Senator Duncan to follow, and Senator Dalphond to conclude.
Senator Duncan: Thank you very much. I’m new to the committee, but I did go through the Senate’s report and I noted that it said the government should examine departments with complex pay requirements, with reference to nurses and to Fisheries folks.
I’m wondering if the isolated-post allowance or the northern benefit was considered a complex pay requirement. I’m asking because my understanding is that employees are not receiving their northern allowance. The response they are receiving when they ask about it is, “You’re getting paid.”
[Translation]
Senator Dalphond: I think Ms. Manchevsky will be able to answer this question.
[English]
The Chair: Minister, do you want to say a few words in closing? Then we’ll continue with your officials.
Ms. Qualtrough: I would defer to my officials and say thank you for taking the time and for your thoughtful questions and your consideration of our efforts to remedy this situation. We will get back to you with the answers. I believe there are two of the four we should provide in writing. I feel like the first two we answered.
The Chair: In writing, please.
Ms. Qualtrough: The other two. Thank you very much for your time.
[Translation]
Senator Dalphond: My question is for you, Ms. Manchevsky, because my sense is that you will know the answer. As I look towards the future, cognizant of the disaster in the past, I sincerely hope that every outstanding case will finally be resolved.
Further to the plan for the next generation HR and pay system, which you refer to as NextGen, the consultants should be reporting back in the spring. The French version of the statement provided to us by the minister cites spring 2019, but the English version indicates “no later than June 2019.” That would mean the end of the spring, not the beginning.
Now, I have some questions. Are things currently on schedule for the recommended options to be provided in June? If so, that would coincide with the beginning of the federal election campaign. Will the plan remain on track regardless of the election campaign? Lastly, I’d like to know what the next step is in the gradual implementation of the new system.
Ms. Manchevsky: Thank you for your questions. Indeed, as the minister mentioned, we will be ready in June.
[English]
The team was initially set up for two years. The plan was always to come back in June with options and recommendations. After recommendations and options, it would then be ideal to launch a procurement process which would likely end up in one, two, or three vendors.
In effect what we have done is we have used an agile procurement process to find vendors. In the spring we will find ourselves with actual viable vendors that we believe, after a series of iterative gates, would be able to handle the complexity of our pay as well as our HR. Our current intention, a year early, is to go with recommendations to pilot. Our view is, much like lessons learned from Phoenix, that we should take the opportunity, particularly while we have folks off on an election, to actually begin work with a vendor and a department to be able to kick the tires.
We are not actually going to turn anything on. We will run alongside Phoenix and alongside current HR systems to ensure that actually the new system works. Realistically, that isn’t going to happen over the course of a month or two — we believe anywhere up to a year — to be able to make sure that it all works. At that point, we’ll return back to Treasury Board to ask permission to in fact turn a switch on.
The systems that we’re looking at are SaaS-based. We’re not building anything, we’re looking to a vendor to provide us with that service. We will need to come back to get permission to turn the system on. It is subscription-based, so we will be looking for funding for that department. When we come back for that, it will be an opportunity for us look to a larger and broader strategy to migrate the rest of the Government of Canada.
Senator Dalphond: To migrate to one system?
Ms. Manchevsky: We don’t think so. We don’t know. I would argue that, in fact, at the end of this process we could qualify up to three vendors. I think what we have come to learn is that probably one size doesn’t fit all. By prequalifying vendors, we’ll actually have a couple of opportunities. One opportunity will be to be able to rely on different vendors for different types of collectives or different types of departments. Another opportunity is if, for whatever reason, the pilot doesn’t work, rather than starting the process over again we’ll have two other vendors to whom we could turn.
Senator Marshall: Thank you very much. I was wondering if you were going with a centralized pay system. You have answered that question.
The other question I had was on the money that’s been spent. You provided a chart that shows that we’re now up to $1.2 billion. I was wondering if the numbers projected in Budget 2019 are realistic. Last year, in Budget 2018, what did we do then? I’m just trying to find numbers now. We thought that maybe this year we would be looking at $19 million, whereas now that time has passed we’ve realized that it’s quite a lot higher. It’s $352 million. But then it looks like the numbers really decline. Like next year, $89 million,$90 million. So how reliable are those numbers? What are they based on?
Mr. Linklater: The numbers I think are quite reliable. The figures for Budget 2019 are based on our actual spend in 2018. What 2019 takes into consideration though is not only our pay operations and the capacity to maintain the staff that we have hired, but also includes three-year technical support provided by IBM. So it’s $523 million over five years. A portion of that is three-year money for IBM. Another portion would be one year for pay operations, about $370 million, and then the remainder would be for additional things like the upgrade to PeopleSoft 9.2 for the system, which will be a multi-year project.
Senator Marshall: When you project what you think it’s going to cost to keep going with your problem transactions, do you assume that some of the staff you have on now are going to be laid off? Is that included in the budget?
Mr. Linklater: The figures for 2019 do not include any forecast for layoffs. We want to continue to maintain the capacity we have to be able to continue to attack the backlog as quickly as possible.
Senator Marshall: Okay. So then for the projections that are there for 2021 and on, into the next four years, they assume the same number of employees?
Mr. Linklater: What we will need to do is to seek funding in Budget 2020 for ongoing operational costs.
Senator Marshall: All right, it doesn’t show up in the budget. That answers the question. Thank you.
[Translation]
Senator Pratte: I’d like more information on manual pay transactions. I gather that the contracts have been awarded or that you’re looking for a supplier to automate those processes. What transactions are currently being done manually?
Mr. Linklater: A substantial number of transactions require manual processing. If the data entered in the HR system are accurate and up to date, Phoenix can process the transactions and make payments without difficulty in 99 per cent of cases. However, if the timing and sequence of transactions aren’t right, a compensation officer has to process the case and verify the calculations. This can involve a simple but late transaction or a complex transaction like leave with income averaging. A number of calculations are necessary. Our goal, with the innovation contracts we signed in March, is to figure out whether the Pay Centre still has procedures that are time-intensive or repetitive, such as mail production and file classification. We are trying to find ways to streamline procedures so that employees can spend more time processing transactions.
Senator Pratte: Does that mean that whenever an employee does overtime or receives a promotion, for instance, a person has to process the case manually?
Mr. Linklater: Not necessarily. If the information is entered into the HR system at the right time, it’s fine.
Senator Pratte: On the contrary, if the information is entered too late, it can cause a problem.
Mr. Linklater: It can mean that a compensation officer has to get involved.
Senator Pratte: What you’re asking suppliers to assess, then, is the portion of transactions that can be automated.
Mr. Linklater: Yes.
Senator Pratte: When will you have the answer to those questions?
Mr. Linklater: As far as the two contracts go, we are expecting to get some information within two months, and if the practices show promising results, we can extend the contract for six months.
Senator Forest: Like my fellow senator, I have a two-part question. Throughout the Phoenix saga, one of my concerns has always been the bid specifications. Do the specifications set out clear expectations? Are you able to challenge the company in the event of delays? Can you impose penalties if the company is late or doesn’t deliver the goods?
Mr. Linklater: Are you talking about the next generation system?
Senator Forest: Yes.
Ms. Qualtrough: The contract with the service provider? We don’t know yet. We haven’t completed our examination yet. We won’t know until the pilot projects have come to an end.
Senator Forest: Will the qualifying companies have to participate in benchmarking and formally demonstrate their capacity to perform the functions?
Ms. Manchevsky: Absolutely.
Mr. Linklater: Yes.
Senator Forest: A test bed is planned, then.
Ms. Manchevsky: Yes. There isn’t one yet, but there will be.
Senator Forest: The qualifying companies will have to establish benchmarks for the functions they deem to be operational.
Ms. Manchevsky: Absolutely.
Senator Forest: Thank you. That’s reassuring.
[English]
Senator Klyne: You’re moving to PeopleSoft now? Is that where you’re transitioning?
Mr. Linklater: Phoenix is a PeopleSoft product.
Senator Klyne: Right, but what are you transitioning into?
Mr. Linklater: Phoenix is now running on version 9.1 of PeopleSoft, and we are now looking at the possibility of moving to version 9.2 in the coming months to be able to ensure ongoing support from Oracle for the provision of tax tables and for what we call severity 1 support for issues with coding.
Senator Klyne: So IBM was originally brought in —
Mr. Linklater: As the integrator.
Senator Klyne: — to do the customization on an off-the-shelf product.
Mr. Linklater: Correct.
Senator Klyne: Who did the original off-the-shelf system? Who was the supplier of that?
Mr. Linklater: Oracle, with PeopleSoft.
Senator Klyne: I would surmise, then, that the issues are really with the hardware or software side of things. If you continue to use Oracle and IBM to customize it, and then you bring IBM back and pay them additional fees to do upgrades, and Oracle is still in the picture, the root of the problem probably wasn’t with the software or hardware. Because you continue to do business with them. You’re not transitioning away, really. You continue to build on it.
Mr. Linklater: We need to continue to transition from like to like for the foreseeable future until a NextGen solution is available.
Senator Klyne: So is it more that the operator is the issue than the system?
Mr. Linklater: It’s a good question, senator. If you take a step back, the HR-to-Pay environment is complex. There are 33 individual human resource systems that feed into Phoenix, which requires the maintenance of interfaces with those HR systems.
Previously, compensation advisers entered compensation transactions directly into the regional pay system. With Phoenix, the idea was to eliminate dual entry and to start at the beginning with transactions that flow from the HR system. So there are issues of integration and multiplicity of systems, which complicates the environment.
At the same time, there have to be interfaces with the unions for union dues purposes, with insurance companies, with the pension system. All of these things create a very complex environment.
As we’ve learned over time, one of the issues with the performance of Phoenix is that the calculations are dependent on good data: garbage in, garbage out. So if data is not accurate and isn’t entered in a timely way, as I was explaining to Senator Pratte, that can cause problems with the pay.
And sequencing of transactions matters. If you do overtime, but you’re in an acting position and the overtime comes in first, Phoenix is going to calculate overtime based on your substantive rate of pay. When the acting transaction comes in, Phoenix has to go back and recalculate what your base pay should be in your acting position, and then recalculate the overtime. So the timing and sequencing of the data entry is crucial for success.
Senator Klyne: You answered my question. Thanks.
Senator Duncan: Thank you very much. My earlier question, when I mentioned the isolated-post allowance, I should also have noted that there can be people working for a complete variety of departments and all expecting this isolated-post allowance.
Following up on the Pay Pod model that you talked about, the minister’s speaking notes say, “Pay Pods handle employee files holistically . . . .”
So if I’m Jane Doe working for the Department of Fisheries in wherever north of 60 and I have issues with my pay, would it be handled, then, by one person, like a hotline into that Pay Pod?
With the comment “over time,” would you elaborate on that? Is the person contacting the employee in the Pay Pod given a commitment that, “Yes, I will answer your question,” or “We will resolve these within this period of time”?
Mr. Linklater: There’s a lot in there, senator. I’ll try to do my best.
We have a dedicated team that’s been established for almost two years in Miramichi that’s been dealing with isolated-post allowances. If there are issues for individual employees in the North who are entitled to IPAs, there is one point of contact for the department to be able to go in and talk to the specialists who know how to do isolated-post allowances. That was put in place with Health Canada before the creation of Indigenous Services. But we’ve maintained that so that Indigenous Services, Health Canada, anyone with an isolated-post allowance cadre of staff, have a place to go.
Health Canada and Indigenous Services and Crown-Indigenous Relations will be in the last wave of pods. So it may be possible over time that, as those pods mature, that work can be repatriated. But at this point, it makes sense to keep that work focused on that one type of transaction for consistency’s sake.
As we set up the pods, what’s critical is the relationship between the staff and the pod, whether they’re in Miramichi or in one of our regional offices. This is the relationship they build with the departmental human resources and finance groups. In effect, we’re recreating what departments had before centralization, where people knew their colleagues, their clientele and the collective agreements and were able to exchange information much more quickly and easily.
If employee X in a department is having a pay problem, they can contact their department HR, who will have a direct line into the Pay Pod in Miramichi. There isn’t a direct line for employees into the pods at this time. However, employees can call the contact centre, and if they have a pay issue that is not already registered the information can be taken and we can create the transaction. If the transaction has already been created and they’re calling for an update, our agents can now provide an update whether or not it’s been assigned. If it is of critical importance, significant financial hardship for the individual, it’s escalated immediately to Miramichi the same day.
Senator Duncan: So are employees calling in given a time frame, depending on the complexity of their problem?
Mr. Linklater: It is challenging to be able to do that. Some pay problems are quite intractable and may take as many as four or five pay cycles to resolve. I can understand the frustration that staff feel about that, but I think we are taking steps to be able to reassure, through the Client Contact Centre, as the minister was saying, that they are talking to someone who can see their file and can provide them with updates as time progresses.
The Chair: Mr. Linklater and Ms. Manchevsky, what is the expected cost of the NextGen system? Have you foreseen that, within the context of the information we have, it will not be solved in one budget year? Can you give us an idea of the impact that will have on budgets going forward?
Ms. Manchevsky: Here’s what I do know: As I mentioned, we will ideally be going forth for approval to do a pilot. So we will do that pilot, and at that point we would come back and seek authorities — if it works, when it works — to deploy to the rest of the Government of Canada. At that point we would be in a position to be able to talk about costs and to deploy for the Government of Canada.
Part of it, as I mentioned earlier, is whether it is one system, two systems or three systems. We would need to kick the tires and have a much better sense on what model we’re going with and in what department and what that eventual rollover would be for the rest of the Government of Canada. So I would say we’ll certainly be in a much better position. We will be in a position, once that pilot has been completed and we’re fairly comfortable moving off of Phoenix and onto a new system, to say what the cost would be for the Government of Canada as a whole.
The Chair: What have you budgeted in Budget 2019-20?
Ms. Manchevsky: We have our $16 million over two years. That is for the planning. The pilot was in the budget but there was no number because it was premature for us. We’re finalizing the last gate of our agile procurement process where we are determining a cost for the pilot. This is why, if you see in the budget, it talks about what we’ve done and about potentially running a pilot. But it is silent on a number, primarily because we frankly weren’t in a position to put in a number. It was a bit early for us. So we’re, as I mentioned, in the final stages and we’ll be coming forth with the request for funding, but only for a pilot.
The Chair: Thank you. I have one last question. Being from New Brunswick, it’s a question that I will ask. I know this impacts all of Canada.
What will happen to the employees at the Miramichi Public Service Pay Centre? Will there be any layoffs or will there be any additional employees hired when the NextGen system kicks in? To what extent will that impact the pay system, both at Miramichi and Shediac? Is it possible to have clarification on that, Mr. Linklater?
Mr. Linklater: Those are very good questions, Mr. Chair. I think one of the fundamentals of the work that’s going on now is that ministers have been very clear that the efforts on stabilization need to continue. I have to say that in Budget 2018 and Budget 2019 we have been given significant resources to continue that work. As I said to Senator Marshall, we’ll need to continue to do that over the course of the coming years.
Ms. Manchevsky has talked about the planning now for a pilot, the need to run a pilot for a year or so and then to look at whether or not there are viable options that could be scaled up and moved out across the Government of Canada. That will take, we believe, anywhere up to five, six, seven years, potentially, for that rollout to take place. That means for the medium term, we are going to continue to rely on the good staff we have in Miramichi and in our regional offices across the country.
We need to continue to attack the backlog to get that down as quickly as possible. We then need to support departments through the pod model as best we can to make sure we maintain our progress, if not accelerate, and ensure that we are paying our staff what they are owed as quickly and as accurately as possible.
The Chair: Ms. Manchevsky and Mr. Linklater, there’s no doubt you’ve read the report.
Mr. Linklater: Yes.
The Chair: We want to say to you, the officials, that you have been very informative. The committee appreciates how you’ve always been professional every time we’ve extended an invitation to you. Tonight has been very informative and helpful.
(The committee adjourned.)