Troubled pay system was nearly jettisoned

16:00, Feb 01 2013

The testing and roll-out of the defective Novopay payroll system was so beset with problems it was delayed three times and almost scrapped.

A chain of correspondence between supplier Talent 2 and the Education Ministry was released yesterday, as the Government attempts to get a handle on the politically damaging debacle.

The documents reveal three cabinet ministers signed off on the project, knowing there were 147 defects. But it is unclear if officials revealed the true scale of problems to ministers. A ministerial inquiry will begin next week to determine who is to blame.

Novopay minister Steven Joyce yesterday conceded he didn't have a "high level of confidence" the system could be fixed. His admission came just a day after he said dumping Novopay wasn't the "simple solution".

Next week's pay round is expected to be chaotic with a new secondary school teachers' collective agreement coming into play.

"I think it would be unfair to say I'm massively confident, but I've certainly got to make the best of the situation we are in," Joyce said.

The documents released yesterday outline a series of delays and problems with Melbourne-based Talent2's complex system.

As early as 2009, officials began winding back the "go-live" date. In 2011, Melbourne-based Talent2 even asked for extra money, threatening to downsize the project. By the end of the year, the ministry put the company on notice.

As the 2012 deadline approached, relations between the ministry and Talent2 became ever more strained, as the firm failed to fulfil promises.

By April last year, officials were investigating pulling the plug altogether. But Talent2 threatened legal action, and advisers said ditching the contract was "unpalatable" to both parties.

Two months later experts from three government agencies and Pricewaterhouse Coopers gave the project the green light. A report to ministers advised of 147 bugs in the system but said they weren't show-stoppers.

The report to Finance Minister Bill English, Education Minister Hekia Parata and then associate minister Craig Foss does not mention the Education Ministry considered jettisoning the system.

It is not yet known if the ministers were told but Mr Foss was receiving regular verbal briefings.

As problems with Novopay became apparent in September, relations between Talent2, which stood to earn $100 million over eight years from the deal and the ministry continued to deteriorate.

In the runup to Christmas, Talent2 was "unwilling" to staff a call centre for teachers, even though it meant a "large number" would not get their holiday pay.

By January, ministry acting chief executive Rowena Phair concluded: "I have no confidence that preventable service problems will not continue in 2013."

Canterbury's Southbridge School principal Peter Verstappen said problems with next week's pay round were already apparent.

He had spotted five errors and says his school's operation grant is $8000 in the red.

"The Novopay system, we were told, would be as easy as online banking."

Labour MP Chris Hipkins said it "beggars belief" Novopay was signed off by ministers.

"They didn't ask the right questions, they didn't ensure that adequate contingencies were in place," he said.


The Press