More pain from Novopay on way, says Joyce

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