Editorial: Government slow to act on Novopay

Novopay Minister Steven Joyce. Photo / Mark Mitchell

System has already cost $45m more than budgeted

Why, Labour education spokesman Chris Hipkins asked, had it taken the Government so long to take action over the troubled Novopay school payroll service? It was a reasonable question on several counts. As long as 18 months ago, a Deloitte technical report said that long-term stability could not be delivered by the system's current processes and resources. A "materially elevated and sustained effort" by both the Ministry of Education and the manager, Australian software company Talent2, would be required. Performance did improve, but problems remained, notably during the three "start of year" payroll cycles at the beginning of this year. Clearly, something had to happen, and should have happened earlier.

Steven Joyce, the fix-it minister brought in to solve the debacle, has decided, finally, that a Government-owned company will take over management of the system from Talent2 from mid-October. That is the right course, and teachers have every right to expect that what the Prime Minister said would be a "properly resourced" company will deliver a simpler and more stable pay service than they have had for the past two years. Yet this outcome had surely been on the cards since it became apparent that Talent2 was unprepared to provide the extra resources necessary for the system's development. This was evident early on in its initial lack of haste to employ extra staff to cope with random errors. These, at their worst, left thousands of teachers either unpaid, underpaid or overpaid.

This smacked of a company choosing to cut its losses by sticking strictly to the terms of a contract that a ministerial inquiry deemed not fit for purpose. Talent2's attitude should have encouraged Mr Joyce to stem the financial cost to the taxpayer as quickly as possible. There was never any real reason to be confident that persevering with it would provide a solution. Similarly, a reversion to the system run by the previous provider, Datacom, was unlikely to be straightforward or financially tenable.

After what Mr Joyce described as lengthy negotiations, a settlement and the logical conclusion have been reached. Talent2 will pay $7 million cash and transfer ownership of software and other assets worth up to $15 million to the Government. One of the shortcomings in the company's approach has been highlighted by the changes that will be made to the system's service centre "to provide better service desk support for administrators and better access to education payroll expertise". In other words, more and better-trained staff.

Mr Joyce is obviously keen for the episode to be consigned to history. The outcome should, he said, "not necessarily be seen as failure on anyone's part any more than it had been". That was a reference to the misrepresentation of Novopay by ministry staff, and the failure of ministers Hekia Parata, Craig Foss and Bill English to detect this. But the lessons should not be brushed aside. If it is unusual for any software system change to be fault-free, Novopay's troubles came not so long after another debacle that involved the police's Incis system. Ministers and their officials should have been on high alert.

Mr Joyce said government control was not a silver bullet. That suggests he expects problems to continue for some time, a point reinforced by the improvements in the service centre, and further taxpayer funding will be needed to achieve a more effective and efficient service. Already, Novopay has cost $110 million, $45 million more than originally budgeted. That should have provided every incentive to staunch the bleeding at the earliest possible opportunity.