Govt set to take over Novopay payroll system

The Government will take over the Novopay school payroll system after the company running it refused to pay more to fix it.

Talent2, the company which designed and administers the system, will pay between $18 million and $22m compensation in cash and discounted services, but the taxpayer will fork out an additional $9m over six years to use the software.

The Government confirmed the deal today, saying it will take it over from October.

Novopay has been beset by problems since it was installed in 2012, with teachers complaining of being underpaid, overpaid and not paid at all, as well as railing against the difficulty of dealing with Novopay.

Steven Joyce, the minister who was put in charge of fixing Novopay, said today that after spending an extra $45m of taxpayer money on top of the original budget to try and fix the issues, the Government had reached an agreement with Talent2 to part ways.

"This decision has been made in the best interests of all parties - staff, administrators, schools, and the Government," Joyce said.

"It became the logical next step towards giving schools a more stable, sustainable and simple payroll service."

Joyce said "considerable effort" had gone into improving the system but following negotiations prompted by last year's ministerial inquiry into Novopay, Talent2 had decided it was "not prepared to provide the extra resources that are necessary for further developing of the system within the current contractual arrangements".

Joyce said Talent2 had also been losing money as a result of the deal.

"Keeping the system performing at its current level under the current operating model has remained very expensive for both taxpayers and the payroll provider," he said.

The final settlement was full and final and there was no potential for legal action, he said.

A new Government-owned company would take over from October responsibility for payroll processing and service centre activities, and for further customisation of the software provided by Talent2.

Joyce said the new company would aim to make it easier for teachers to deal with matters relating to salaries and the payroll system would be made less complex.

Taking over gave the Government greater flexibility to make the necessary changes to improve the system, though there was a “significant possibility' the service could be contracted out again in the future.

"We'll also be simplifying the school payroll," Joyce said.

"The current system requires two-thirds of all teaching and non-teaching support staff have their details changed every year. This sort of complexity has caused problems for not one but two pay systems over the past decade and it's not sustainable."

The new service-delivery model would work more closely with schools, giving them a more-tailored service based on feedback from the sector.

There would be no job losses as a result.

Asked if he could give an assurance today's changes would improve teacher pay service, Joyce responded: "Absolutely".

Talent2 said in a statement that it would hand over to the new Government entity on October 17.

"The decision has been reached by mutual agreement in support of a new service-delivery model and settles a flawed contractual arrangement between the parties, which was found in the June 2013 ministerial inquiry as not fit for purpose," it said

"Under the new arrangement the Government will assume full responsibility for the provision of the education payroll service."

Labour's education spokesman Chris Hipkins said the change was "cold comfort to teachers and school staff still struggling with Novopay".

"How on earth did the education minister sign off on a system that was so deficient?" he asked.

"And why did it so long for the minister who took over responsibility, Steven Joyce, to finally decide to take action?.

“Teachers and school staff have waited long enough for Novopay to be fixed.

"The Government taking over Novopay changes nothing. If Talent2 couldn't make the system work, what confidence can teachers and school staff have that the Government will be able to succeed where they failed?"

NZ First education spokesman Tracey Martin said the system had "wasted tens of millions of taxpayers' dollars".

"If Mr Joyce thinks he will convince teachers and support staff that all will be well with their pay in the future by taking over and renaming Novopay, he is mistaken," she said.

"Teachers and support staff have been in utter misery, facing weeks without pay, being underpaid and all manner of irregularities."

The programme should never have gone live, she said.

Christchurch special needs school, Waitaha, has been battling Novopay issues since its introduction, and had to hire an extra staff member "because it was just untenable the way it was", principal Margaret Dodds said.

She had been constantly emailing Joyce to update him on the school's issues, and had received a written apology for the system's failure to follow process.

"They just keep getting it wrong," Dodds said.

The school set up its own spreadsheets to keep track of mistakes the payroll failed to comprehend.

"That's what we've had to do to remain sane actually," but there had been little compensation, and she was "sick of hearing 'sorry'."

"Nobody gave us enough of a framework to understand what our responsibility was going to be in terms of Novopay. What the schools needed was left out of the equation."

It sounded as though the Government would use the same troublesome system, and she was unsure there would be improvements.

"We can't do a third year in a row with these failures."

She was optimistic however, considering the Government would be careful not make a detrimental move on election year.