Phoenix Pay Problems; Call Centres—Canada Revenue Agency

Opening Statement to the Senate Standing Committee on National Finance

Phoenix Pay Problems

(Report 1—2017 Fall Reports of the Auditor General of Canada)

Call Centres—Canada Revenue Agency

(Report 2—2017 Fall Reports of the Auditor General of Canada)

31 January 2018

Michael Ferguson, Chartered Professional AccountantCPA, Chartered AccountantCA
Fellow Chartered Professional AccountantFCPA, Fellow Chartered AccountantFCA (New Brunswick)
Auditor General of Canada

Mr. Chair, thank you for this opportunity to discuss our fall 2017 reports on Phoenix pay problems and the Canada Revenue Agency’s call centres. Joining me at the table are Jean Goulet and Martin Dompierre, the Principals who were responsible for these recent audits.

I will summarize for the Committee the relevant findings from these audits; however, it is important to note that our audit work was completed in September 2017.

Let us start with our audit of the Phoenix pay system. In 2009, the Government of Canada began to transform the way it processed pay for its 290,000 employees. This Transformation of Pay Administration Initiative had two projects. One involved centralizing pay services for 46 departments and agencies that employed about 70% of all federal employees. The other involved replacing the 40-year-old pay system used by 101 departments and agencies with a new system called Phoenix.

Since Phoenix went live in February 2016, the federal government has frequently not been able to pay federal public servants accurately or on time. Our audit examined whether Public Services and Procurement Canada worked with selected departments and agencies to fix Phoenix pay problems so that government employees would receive their correct pay, on time.

This audit is important because the government’s pay problems have had a financial effect on tens of thousands of its employees, and the system has to be fixed.

We found that pay problems continued to grow throughout the period of our audit. A year and a half after the government launched the Phoenix pay system, the number of public servants waiting for a pay request to be processed had reached more than 150,000 in the 46 departments and agencies whose pay services were centralized. These 150,000 employees were waiting for about 500,000 pay requests to be processed. These numbers do not include the outstanding pay requests in the 55 departments and agencies whose pay services were not centralized nor the outstanding requests required by the recently signed collective agreements with federal public service unions.

Problems grew to the point that the value of outstanding pay errors totalled more than half a billion dollars at the end of June 2017. This amount consisted of money that was owed to employees who had been underpaid as well as money owed back to the government by other employees who had been overpaid.

Departments and agencies struggled with Phoenix pay problems from the time the system went live. However, it took Public Services and Procurement Canada 4 months to recognize that the problems went beyond normal processing levels. Since that time, the Department reacted to problems but implemented few permanent solutions. In fact, 16 months after the problems first arose, there was still no governance structure in place.

In our opinion, there are two parts to the solution for the Phoenix pay problems. The first priority is to pay people the right amount on time. However, after this is achieved, there will still be work to do to get a system that processes pay efficiently.

Public Services and Procurement Canada told us that it was developing a comprehensive plan, including detailed cost information, to resolve the pay problems. However, it had not finished this plan by the end of our audit.

To put in place a viable solution, the government needs to identify and address the root causes of the problems; exercise strong oversight of the steps taken to resolve the problems; and ensure that there is strong collaboration that includes Public Services and Procurement Canada, the Treasury Board of Canada Secretariat, and the affected departments and agencies.

In our view, fixing the Phoenix pay problems will take years and cost more than the $540 million that government organizations have so far estimated they will spend to solve the problems. We found that the Australian State of Queensland had dealt with a similar situation; most of its pay problems took eight years and over $1.2 billion to solve.

Let me turn now to our audit of the Canada Revenue Agency’s call centres. The Agency’s call centres are an important way for members of the public to obtain tax information.

Our audit looked at whether the Agency’s call centres provided Canadians with timely access to accurate information. We also examined the methods that the Agency used to assess and report on its call centres’ performance.

Overall, we found that the Agency did not provide timely access to accurate information. The Agency blocked 29 million calls, or more than half of the calls it received. It monitored how long callers waited to speak with an agent. When the average wait time approached two minutes, the Agency either blocked calls—usually by giving them a busy signal—or directed them to the automated self-service system.

The Agency told us that callers preferred receiving a busy signal or an automated message to waiting more than two minutes to speak with an agent. However, the Agency had not surveyed callers to verify this assumption. As a result, callers had to make an average of three or four call attempts in a week—and even after several attempts, some callers still did not reach an agent.

Through our tests, we found that the rate of agent errors was significantly higher than what the Agency estimated. Call centre agents gave us inaccurate information almost 30% of the time. This is similar to the test results of other assessors and significantly higher than the error rate estimated by the Agency.

We found that the Agency’s quality control system did not test the accuracy of agents’ responses effectively, so the results of its tests were unreliable. For example, in most cases, agents knew that their calls were being monitored, which may have encouraged them to change their behaviours to improve their performances.

Finally, the Agency reported that about 90% of callers were able to reach either the automated self-service system or a call centre agent. However, we found that this percentage did not account for the calls it blocked—which were more than half its total call volume.

After accounting for blocked calls, we found that only 36% of all calls made to the Agency’s call centres reached either an agent or the automated self-service system and lasted a minute or more.

We are pleased to report that the relevant departments and agencies subject to these audits have agreed with all of our recommendations and have committed to taking corrective action.

Mr. Chair, this concludes my opening statement. We would be pleased to answer any questions the Committee may have. Thank you.