Editorial: Let that be a lesson

16:00, Mar 13 2013

The Government's Mr Fix-It Steven Joyce faces a difficult choice when he determines the future of the Novopay school pay system some time in the next two weeks.

He can opt to keep pouring money, time and effort into the current system operated by Australian payroll company Talent2 or he can choose to cut the Government's losses and ask New Zealand company Datacom to revive the system that Novopay was designed to replace.

Neither is an attractive option. Nothing about Talent2's performance to date suggests it has the expertise or the will to eliminate the gremlins in the system that have led to thousands of school staff being underpaid, overpaid or not paid at all.

Talent2 underestimated the complexity of the task it was taking on, failed to provide adequate training to school administrators and did not employ enough staff to deal with glitches in the system. Worse, it was reluctant to staff its service desk the weekend before Christmas - a course that would have resulted in a large number of school staff not receiving their holiday pay before their break. Correspondence between the ministry and Talent2 shows it took a phone call from then-associate education minister Craig Foss to Talent2 chief executive John Rawlinson to get a solution. Those are not the actions of a company that cares about its clients or its reputation.

On the other hand, there are no guarantees that Datacom can seamlessly revive its old system or that it can modernise it any more effectively than Talent2 has been able to implement its system.

If Mr Joyce does elect to pull the plug on Novopay there is a danger he will be jumping from the frying pan into the fire.

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There are lessons that can be learned from the debacle, however. The first is that ministers blundered when they elected to go live with Novopay in August without first piloting the system in a handful of schools. Concern about the bad publicity that might have accompanied another delay in the project appears to have trumped common sense.

The second is that governments and government agencies should think carefully before outsourcing key parts of their operations. The correspondence released last month reveals that it was not only Talent2 which underestimated the size and complexity of the task it was undertaking. So did the ministry.

Having previously awarded its payroll contract to Datacom, it lacked the institutional knowledge to assess Talent2's ability to make good on its commitments. When the new system failed it had no way of putting it right. Its only recourse was to make legal threats.

Ultimately, the ministry may be able to successfully sue Talent2 for breach of contract, but that will provide no consolation for teachers, caretakers or office staff who have been wrongly paid. Nor will it compensate school pupils for school resources being diverted from classrooms to payroll issues.

Ministers and the ministry have let the public down. Hopefully, the lessons learned will not be forgotten.

The Dominion Post