Prime Minister John Key has put the company behind Novopay "on notice" and installed the government's Mr Fix-it Steven Joyce to sort out the teacher pay debacle.
Craig Foss, who had responsibility for the troubled teacher payroll system, has been stripped of his associate education portfolio.
Key said he can't have Novopay "lingering on forever, dogging the Cabinet and the government."
And he said the matter had become "commercial", hinting human resources company Talent 2 could face penalties for the on-going saga, which has seen hundreds of teachers underpaid and schools begin the new year in the red.
Since September, the $29 million system has been plagued by problems and saw Education Ministry boss Lesley Longstone quit.
But the government wasn't looking to get out of the contract with Talent2, Key said.
"I take it seriously when teachers aren't paid properly...one thing we know about Steven Joyce he is thorough...if I were the providers of that system I'd be on notice," Key said.
Key made the announcement as he unveiled his new cabinet line-up today, saying Novopay was a "major priority to resolve."
"I can't guarantee that's going to happen overnight," he added.
He said the issues were "deeply embedded" and Joyce would have to do a "stocktake." "There are some things in there I suspect we don't know," he said.
Joyce has commercial experience, "and we need senior ministers with grunt," Key said.
Underfire education Parata keeps her job and would concentrate on under-performing children, schools that are failing and Christchurch.
Auckland central MP Nikki Kaye takes over from Foss. Key said she will bring the perspective of a younger person to the portfolio and give support to Parata. "She is a very bright young woman...but always speaks a bit to where I want to take education."
Labour's acting education spokesman Chris Hipkins said it was time the government lined up alternatives to Talent 2.
"I don't see putting Steven Joyce in charge is going to change anything unless he actually changes the decisions. I think Talent 2 should be penalised and put on final notice. If they don't get it right and get it right really fast it should be ditched."
And Green party co-leader Metiria Turei said it was time to dump the contract and put in a plan to fix the problems "as soon as possible."
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