More pain from Novopay on way, says Joyce

Steven Joyce at today's press conference

Novopay is a dog of a system, Economic Minister Steven Joyce says.

“It’s got a few fleas, yes,” he said at a briefing this afternoon, announcing the appointment of former Deloittes CEO Murray Jack to head a technical review of the troubled teachers' payroll system.

That review should be completed “in a matter of weeks”, Mr Joyce says.

He does not see the need – yet – to dump the system and go back to the old system run by Datacom.

Such a move would involve “even more short-term pain” and will only happen if the government concludes Novopay is irretrievable.

Mr Joyce, who was given responsibility for sorting out the Novopay mess in the government's cabinet reshuffle last week, has spent the past seven days meeting with the Novopay system vendor, Talent2, and officials.

“Next week’s pay round covers the beginning of the school year and the Ministry of Education and Talent2 are expecting further issues particularly with the start of a new secondary school teachers’ collective agreement.”

New contingency plan

Alongside the technical review being carried out by Mr Jack, the government is also looking at a new contingency plan to ensure teachers’ pay is delivered and also a ministerial inquiry into the whole affair, details of which will be signed off by the cabinet next week.

“I have made it clear to all parties that the on-going issues with Novopay are unacceptable and new measures are being put in place to provide timely solutions."

The government is about to do an “information dump” of papers relevant to the approval of the Novopay system, and Mr Joyce says they will show all concerned gave the system the thumbs up when it was approve by ministers and officials in the middle of last year.

“There was definitely knowledge there were bugs in the system at the outset of going live. There are always bugs in systems like these.”

Those who approved it “would say in hindsight gave advice they would rather not have given… There’s plenty of blame to go around on this. Everybody who has been involved in this will be able to look at this sand saying, actually there’s some things we should have done differently”.

The cost of the various inquires announced today and the remedial work necessary could cost “millions”, Mr Joyce says.

The previous teacher pay system, run by Datacom, had similar problems to Novopay, which was one of the reasons the change was made.

Datacom is majority owned by NBR Rich Lister John Holdsworth.

“Its one of the questions the inquiry needs to look at is what is going on here – is there something going on in the complexity of the system and how it operates.

"We all know it is a very complex system, 15 different collective agreements and all their variations. I’m not using any of that as an excuse, it’s just an example of where some of the challenges have been.”

But the previous difficulties, particularly when the Datacom system  was new in the mid-1990s, suggest something systemic.

“It just doesn’t make sense to repeat that level of pain.”

Tomorrow’s information dump is likely to contain further embarrassment for all concerned and more is expected next week when the next teacher pay round takes place.

NBR Rich List debut

Last year, Mr Holdsworth made his debut in the NBR Rich List with an estimated net worth of $150 million.

He continues as chief executive to lead Datacom, which is New Zealand’s largest locally-owned IT services company and 54% owned by him and his family.

Turnover reached a record $725 million last year, though profit dropped a little to $22.3 million.

Datacom’s activities are spread throughout New Zealand, Australia and Southeast Asia, with it providing technology services to more than 2000 organisations. It recently announced a push into China.

Datacom has offices in nine New Zealand centres, where 1900 of its 3400 staff work. The company expects to be a $1 billion business within three years.

New Zealand customers include ASB Bank, Microsoft, NZ Post, Air New Zealand, Fletcher Building, NZ Customs, the Justice Department and Land Information NZ.

It also provides payroll services to 3400 New Zealand companies.

Additional reporting by Chris Keall

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16 Comments & Questions

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Considering the botch-job Talent 2 made in implemented and managed this entire project they should simply not be paid any more money. There is no reason they should make a cent of profit until the system works as requested. Changing suppliers again would mean a lot of money would be wasted but, as a matter of principle, the govt should ensure Talent 2 is severely hampered financially over this.


In principal, I completely agree, however, this seems to be the crux of it: "until the system works as requested."

There's every chance it does work *exactly* as requested, and that could be part of the problem. Sometimes getting the sufficiently detailed and clear request is half the problem.

In all likelihood the 15 different collective agreements and the myriad processes and variants contained therein were beyond the ability of the business analysts and ministry staff to specify in sufficient detail.

Of course, yes, someone should have recognised this and called it. See also: "IRD puts off upgrading its mainframe system for another five years."


Perhaps the real problem is the immense complexity now of our thieving, sorry, taxing systems. For years the IRD and judicial system have used the employer as the easiest point to siphon off the booty from PAYE, Kiwisaver, ACC, court fines, et al, to the point where there are so many outgoings, trying to mirror so many regressive progressive tax rates and taxing systems, that no system will be able to run it adequately.

Forget Mr Joyce, the answer lies with Mr Dunne. Get rid of income tax and the State's fist in everyone's pay packet.


For the record, I wasn't just stating an opinion, I was simply pointing out fact, as given in the story, namely:

'The previous teacher pay system, run by Datacom, had similar problems to Novopay, which was one of the reasons the change was made."

It's the complicated mish-mash of taxes that is the problem: keep it simple, stupid, applies in tax, as with any other field.


Good idea. Lets have a review so that a high-paid consultant can tell us that the system does not work.
Sack them and charge them damages, just like in the real world.


I agree. Out there in the real world, anyone who doesn't perform is terminated real quick.


And then their employer is fined $10,000 for terminating them!


Simple stuff if I've read between the lines here...

Putting any IT system over the top of processes that are not sorted out will result in the system not delivering.

Sort out the processes and procedures first, then put the system in.

Make sure the system has no major bugs before going live. If there are major quality problems then do not go live.

So much for learning from the past.


The problem in New Zealand is that we over-value personal experience (or perhaps, adequately value) and completely undervalue accumulated experience of others.

For example, if academics were to highlight critical factors from a review of 150 major projects, someone's personal experience of "I worked on this type of project at Harry's Auto Shop" generally holds more sway here.

It's a funny old thing...

(Disclaimer: I'm not an academic. I'm a horse, clearly.)


My mate said he saw you win a race once, so yeah, clearly you're a horse.


I wonder if the rules used to pay teachers are so complex that the only place they were fully recorded/understood was in the previous Datacom payroll system.
Maybe the teacher pay negotiating process in New Zealand tends to create very complicated rules compared to, say, Australia.
Maybe the problem is not with a generic teacher payroll system like Novapay but with how the payroll rules are arrived at in the first place.
Is there a perverse incentive for certain parties negotiating pay to arrive at complicated rules?
If Novapay works fine in Australia then I think the problem is not so much with Novapay itself but with officials' blissful ignorance of how their own payroll works.
I think a lesson for the future is to look carefully at any IRD software redevelopment to see how complicated the current rules are and if it is actually possible to shoehorn the current IRD computer setup into a generic software system designed overseas.


I would not be so sure they were completely understood by Datacom either. They were likely piled on top of each other over time and kept working as well as possible for as long as possible.

Have you ever seen power lines in Bangkok or Manila? It's the same. Ask a linesman to detail where each line goes and what each one connects to and he won't be able to tell you. Everyone has power, and each time a new connection is needed a new line is added. .The poles are birdsnests of tangled lines, but it's working - barely. Heaven help you if you try to figure it out from there though...


Payroll is fundamentally a simple concept - there is an agreed rate of pay be it a salary or hourly rate, this generates a tax liability, then less other deductions like Kiwisaver or whatever, equals net pay to the recipient - can someone tell me which bit don't I understand??

Given the above - have I missed something, if not then clearly Novopay are a bunch of plonkers and should be kicked out!!

The downside to that scenario will be that if Datacom were to get the contract back again, it might give a "feel good" factor with a NZ company but there will always be a time lag before everything is totally fixed, whoever takes it on.


Seven stages of a project

Phase 1: Uncritical Acceptance
Phase 2: Wild enthusiasm
Phase 3: Dejected disillusionment
Phase 4: Total confusion
Phase 5: Search for the guilty
Phase 6: Punishment of the innocent
Phase 7: Promotion of non-participants

I remember once working on a project that wasn't going very well and someone pinned the above wise sayings onto a partition.
It basically empowered those working on the coal face and was a reminder for the political types/bosses to carefully consider their actions.
The project ended up being very successful.


It seems to me that the real problem area here, is within the bureacracy that handed the plan to the various ministers for 'signing off'.
Clearly, once the fog lifts, there will be/should be some solid backside kicking and dismissals at the top end of the Education Ministry.
There is no room for managerial ineptitude to be retained.


Viewed from the outside it seems to me clear that there are fundamental design/policy issues in the system. It should not be Novopay's developers or central administrator's responsibility to enter correct data. That should be devolved and decentralised as far as possible and with proper security controls. If there are mistakes it should be crystal clear who made them, who is responsible for finding them and who is responsible for fixing them. None of that should be dependent on the system administrators beyond the provision of proper online tools to do the job. Why people are submitting paper forms and ringing call centres to try to get data problems fixed is totally beyond belief.


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