Demonstrators see ‘glimmer of hope’ after Liberals vow to replace pay system

FILE: Civil service unions vowed Wednesday to hold the Trudeau government’s feet to the fire after the Liberals pledged in their latest budget to replace the troubled Phoenix pay system with a “next-generation” compensation system that works. (Photo: Justin Trudeau/Facebook)

OTTAWA — Civil service unions vowed Wednesday to hold the Trudeau government’s feet to the fire after the Liberals pledged in their latest budget to replace the troubled Phoenix pay system with a “next-generation” compensation system that works.

Federal employees rallied in at least a dozen cities across the country to mark the second anniversary of the disastrous launch of Phoenix.

Finance Minister Bill Morneau introduced a federal budget that included plans to spend $16 million over two years exploring options for building a new pay system while eventually scrapping the IBM-built Phoenix program.

The system is clearly not delivering as it was supposed to, Morneau said Wednesday in a post-budget event at the Economic Club of Ottawa.

“What we’ve said over the long term is that we need to find a new approach — a new approach that works.”

While many workers said they were encouraged that the pay system will be replaced, their unions were determined not to let their guard down until the government delivers on its pledge.

“I see this as a glimmer of hope in a long two years of constant stress and financial worry for our members,” said Debi Daviau, president of the Professional Institute of the Public Service of Canada, at a rally in Ottawa.

“We need a pay system that works, and we have the people to build it,” Daviau said, pointing to the government’s benefit distribution system, the NetFile tax filing system and border control systems as prime examples of what her members can do.

“These are the same professionals who designed and built virtually every important computer system that the government relies on.”

The Phoenix pay system has been a nightmare for tens of thousands of civil servants since it was formally launched two years ago.

Fixing the problem, which has left many government employees underpaid, overpaid or not paid at all, is expected to cost upwards of at least $1 billion, with estimates that the final tally could go much higher.

Tuesday’s federal budget also provided indications that it could take more than two years to develop, test and ultimately launch a new pay system.

The Public Service Alliance of Canada, which organized the rallies, said it’s still concerned that the Trudeau government didn’t provide an exemption to ensure that employees who were overpaid don’t have to return the gross total of those overpayments.

PSAC said its members complied with government instructions to report overpayments by mid-January or risk having to pay back more money than was deposited into their bank accounts. But thousands of civil servants could still be forced to pay back the gross overpayment amounts because of the government’s inability to process their reports, the union said.

Too little, too late. That’s what I think about the budget,” said PSAC president Robyn Benson.

The government has agreed to consider changing tax laws for the 2018 tax year to allow public servants who were overpaid to repay the net amount, rather than the gross amount.

The budget allocates an additional $431 million over six years to address problems created by Phoenix, plus the $16 million to begin the process of finding a replacement, on top of the $460 million already committed to both implement the pay system and resolve subsequent problems.

And the Canada Revenue Agency will get $5.5 million to conduct income tax reassessments for individuals affected by Phoenix.

But the costs are likely to escalate under a government pledge to also work with the unions on compensating employees for mental and emotional stress caused by the Phoenix foulups.

The opposition New Democrats had introduced a motion calling on the government to both compensate and apologize to civil servants, but that motion was defeated Wednesday in the Commons by a margin of 159-135.

When it was approved in 2015 by the previous Conservative government, officials said the Phoenix pay system would save taxpayers about $70 million annually by streamlining and consolidating pay systems across dozens of departments and agencies.