Serious side-effects in 'Novopay nightmare'

19:07, Jan 26 2013

The flawed Novopay system has spawned a number of serious side-effects that have changed tax brackets, misdirected ACC levies and forced teachers to prove their identity, among others.

The Ministry of Education has now apologised for the much-maligned system and the "frustration" and "anxiety" it has created.

Working alongside schools, the Sunday Star-Times has investigated thousands of complaints regarding the $29 million system and has discovered a raft of alarming side-effects to the widely reported non-payments and over-payments.

Bulk payments, to make up for weeks of not being paid, are pushing teachers into new tax brackets, leaving them out of pocket and unable to recoup money until filing a tax return at the end of the financial year.

Child support payments are not reaching some recipients.

Payments are not being made to ACC, superannuation funds, KiwiSaver and student loans, despite being taken out of wages and listed on payslips.


Teachers are losing thousands from being struck down the 12-step pay grade by a system "fix" and have to go to great lengths to prove their identity to have their pay readjusted.

Schools are facing upcoming audits with accounts so depleted they have been forced to put Novopay down as a debtor.

Post Primary Teachers' Association (PPTA) president Robin Duff said Novopay problems had seeped into other government departments.

At a recent meeting with the Ministry of Education, ministry staff revealed problems "have links to the IRD and other groups like ACC", Duff said.

"Some people are having items shown on their payslips which are not getting through to the right account."

Education Ministry group manager Rebecca Elvy apologised on behalf of the ministry for the problems teachers have been put through.

She said the ministry was working closely with the Ministry of Social Development, the Inland Revenue Department and other agencies to help those affected by Novopay.

She advised staff experiencing problems to contact the ministry.

"We can explain the situation to MSD and provide any evidential documentation needed," she said.

The IRD has also stepped in to ensure the information it receives from employers regarding gross pay, PAYE, student loans and KiwiSaver deductions are correct.

An IRD spokesman said Novopay was affecting employers and individuals.

"It is important that any delays to customers receiving their entitlements or meeting their obligations are minimal and their information or records held by Inland Revenue are updated as quickly as possible," he said.

"We offer assistance to any employer or employee who believes that compliance with their tax obligations has been disrupted so they are not disadvantaged."

The Office of the Auditor-General is putting steps in place to ensure schools are not disadvantaged by Novopay errors in the upcoming audits.

Minister Steven Joyce was brought in last week to tackle the Novopay disaster.

He held numerous meetings with Talent2, the ministry and management teams last week, and those meetings will continue this week.

He will soon visit schools in Auckland and Wellington to meet with administration staff on the front line.

"It is not going to be an immediate solution.

"We are working as quickly as we can," Joyce said.

Labour acting education spokesman Chris Hipkins said the "Novopay nightmare" was going to continue for some time.

"At the end of the financial year, thousands, possibly tens of thousands, of people are going to have a heck of a job getting information together to do their tax returns," he said.

"For the lucky ones, they'll get a tax refund. The unlucky ones could find themselves getting socked with a big tax bill."

Sunday Star Times