Phoenix Pay System Error Has Cost Ottawa More Than $3.6 Billion

Public servants protest over problems with the Phoenix pay system outside the Office of the Prime Minister and Privy Council in Ottawa on Oct. 12, 2017. The Canadian Press/Justin Tang

The federal government’s Phoenix payroll system failure has now cost in excess of $3.6 billion, according to a department of public works briefing note.

“We have put in place a significant number of system enhancements and fixes which have helped bring increased stability to the pay system and overall pay administration environment,” said the April 15 briefing note. “To date $3.65 billion has been invested in Phoenix.”

The government has committed to supporting federal employees and is taking action “on all fronts” to resolve the public service pay issues, reads the note, which was first obtained by Blacklock’s Reporter.

“Since the launch of Phoenix, we have implemented a series of measures and made consistent progress,” the note said.

The Phoenix pay system was launched in 2016 on a promise it would save taxpayers $70 million by centralizing 46 separate federal payroll departments into a single office located in Miramichi, New Brunswick. Auditors determined in 2017 the  software had been used without testing, resulting in thousands of federal employees being either overpaid, underpaid, or not paid at all.

To compensate the federal employees affected, the Public Service Alliance of Canada announced in 2020 the employees could receive up to $1,500 in compensation if they were impacted by the glitch.

Assistant Deputy Public Works Minister Simon Page testified last November at the House of Commons government operations committee that costs were ongoing.

“That total number includes both the cost of continuing to pay public servants as well as dealing with items like the backlog and continuing to improve the system,” he said.

Auditor General Karen Hogan found in October 2022 there were “continued weaknesses in internal controls of pay processes.”

As of March 2022, approximately 17 percent of federal employees still required Ottawa to make corrections to their payment, which represented a decrease from 41 percent in the previous year, according to the report.

“These findings represent an improvement over previous years,“ the report said. ”However, the percentage of errors is still concerning.”