Joyce Steven: Urgent Debates — Teachers and Support Staff Payroll—Ministerial Inquiry into Novopay SystemText is incorporated into the Bound VolumeJoyce Steven: Urgent Debates — Teachers and Support Staff Payroll—Ministerial Inquiry into Novopay System[Sitting date: 04 June 2013. Volume:690;Page:10643. Text is incorporated into the Bound Volume.]Hon STEVEN JOYCE (Minister responsible for Novopay): Today was the day theReport of the Ministerial Inquiry into the Novopay Project was released. Unlike what the Greens have just said in that last speech where they seek to blame the Ministers the point of the report I think is clearly that there is blame to go around for all parties and sadly nobody has acquitted themselves with great distinction in the introduction of this project. There is a bigger question actually because this is not the first information and communications technology project that has had issues. In fact it is not the first information and communications technology project with the education payroll that has had issues. In fact you can go back to the mid-1990s and the introduction of a payroll under another company’s name where there was again an inquiry this time by the head of the Ministry of Education about concerns in the way that that particular programme was introduced. The net result was that a number of changes were made and it was thought that these things would not happen again. So rather than just leaping to the political conclusion that the Greens seek to leap to and nodoubt other members of the Opposition as well it is important to take the time to at least read a few pages of the report and ask yourself what actually went wrong here.Sadly what went wrong was that in a number of ways the people whom the public should be able to rely on—some of the staff some of the suppliers—in this instance were not able to or did not fully perform their role well. The problems with Novopay as the report notes have affected public trust and confidence in the Ministry of Education and of course also in the wider public sector. The report identifies weaknesses in project governance and project leadership that allowed the system to go live with a number of significant risks that the ministry and its vendors including Talent2 were in the words of the inquiry “over-confident of managing.” These risks as we now know resulted in service issues that the ministry and Talent2 were unprepared for and they were overwhelmed by their nature and scale.The report goes into the history of what happened in the whole saga and it goes back many years right the way to 2005 and earlier. It makes the observation that New Zealand’s school payroll is very complex. It compares it with the health sector payroll. But it is also very complex with some very unique elements to it. As a result there was extensive customisation of the Novopay software. The ministry notes there was a failure by the ministry to involve the users of the Novopay system in the schools and appreciate their requirements. So those two things alone indicate some of the difficulties that you can see happen in these situations when the project that was set up did not first seek to simplify its business processes and did not stay close enough to the users of the system.Probably one of the biggest issues was the lack of accountability for independent quality assurance. Ministers were entitled to expect that the quality assurance processes that the State sector has would have applied in this case and unfortunately despite assurances that they did this was not the case. The result is that Ministers were not well served by the information they were given on the project. The report notes that reporting to Ministers was “inconsistent … unduly optimistic and sometimes misrepresented the situation.” I think it would be important to quote in light of what Ms Turei has just said what was said in regard to the June 2012 document. This is on page 88 of the report. It says: “We were particularly concerned about the 5 June 2012 document which invited Ministers to approve the Ministry’s Go Live decision. This report misrepresented the situation in two significant ways. It suggested that the Go Live decision was supported by three members of the ICT Council which was not the case; and it stated that Confidence Point Two criteria had been met when in fact a number either had not been met or were ‘deemed’ to have been met (a lower criterion). These factors overrepresented project readiness and its chance of success.” That was the paper that invited Ministers to make a decision to proceed with the go-live situation with Novopay. I think it is important whenever members get up in this House to acknowledge that because irrespective of your political background it is important that Ministers are able to accept the written word of their advisers in the ministries. If you cannot do that then the Government processes break down very quickly.Overall this report makes for very sober reading. It confirms the view that there is a lot of blame to go around for the problems with the software program. It does provide a greater understanding of the level of fault between the organisations involved. It mentions the ministry at significant length. Actually you do not have to go far to know that the ministry has had issues that stretch back again for some period of time many years in fact including the period of the previous Government. The performance improvement review or PIF review for the ministry just a couple of years ago was very sobering reading indeed and unfortunately its difficulties are reflected in this report. But it is also the case of being able to rely on other advisers and I note that the primary consultancy PricewaterhouseCoopers has been mentioned in the report and the StateServices Commission and Treasury as well. So it is fair to say that nobody—none of the agencies involved and none of the organisations contracted—has come out of it very well. Of course it mentions the key supplier the Talent2 organisation which failed to meet a number of deadlines. But again even that process was fraught because it becomes apparent as you read the report that the ministry changed the specifications significantly over the period of time the project was in development.So I think there are many places where people who have perhaps already read the report online this afternoon could shake their heads and say: “This is a real problem. This is a difficulty. Why did this happen in this way?”. I think if we come back to the issue of independent quality assurance unfortunately in relation to that I think you could make the observation as I did myself earlier this afternoon at a press conference that a process of groupthink developed where there was a drawing in of those who were there to provide that independent assurance for Ministers into the project itself. The State Services Commission PricewaterhouseCoopers and others were drawn into that project—Grant Robertson: Go on. Just take a little bit of responsibility just a little bit.Hon STEVEN JOYCE: —Mr Robertson and basically were not able to give that independent approach that potential to say “We should blow the whistle and not proceed necessarily with the project at this time.”Like I say these issues that the report very adequately lists bring a number of questions and lessons that need to be learnt for the future and the inquiry report lays those lessons out quite clearly for the public sector.Sue Moroney: Pretty basic.Hon STEVEN JOYCE: The member may say it is pretty basic but actually it is pretty basic that some of the things should have been done at the outset. Seeing as we are laying a bit of blame around the place and obviously the member seeks the desire to lay some blame those members on that side of the House who were part of some of the original decisions perhaps should have actually called for some process simplification before the process actually began instead of sitting there now today saying: “It’s nothing to do with us. Nothing actually happened when we were there.” when quite fundamentally it happened over a significant period of time.So where to from here? It is very important to address the issues that go forward. There will be some issues that arise out of this report. One of those issues will be as the Secretary for Education has announced an investigation into some employment matters. That is appropriate. There will also be other consequences of some of the recommendations in this report. More specifically there needs to be a real think forward about how to handle these projects in future. For my money one of the key parts of it is to actually go through that business process assessment—to go there and say: “Can we change and simplify some of these processes before we make a big change in an information and communications technology system in this regard?”. I think it is incumbent on every agency to go through that exercise and to encourage the Government of the day to try to make these simplifications before the process starts.For this particular system we are in the process of remediation and we have made some significant progress although nobody would say that the system is fixed at this point. We have improved dramatically the performance pay period to pay period. We now have the situation that for five out of the last six payroll periods the error rate has decreased to less than 0.5 percent of transactions which is good progress. Last week 88500 people were paid a total of $173.53 million and 29 staff were notified as being not paid. That has been reasonable progress.The second stage is of course the remediation and dealing with the backlog of issues in the system. Firstly there is the outstanding work and there have been veryvery large numbers of transactions that have to be caught up with. We are making some pretty good progress in terms of outstanding pay instructions the backlog of inquiries to the ministry and leave balances. I am hopeful that these would be back to business-as-usual levels by the end of June. However overpayments resolution is taking a longer period of time and additional work is being done into the overpayments resolution system to speed up the clearance of those issues. The next area that has to be resolved is the resolution of software defects. This last weekend a further 58 defects were closed. We are now down to 14 category 2 or very serious bugs left nine of which are targeted for closure in June. If we achieve even half of that number then we will have fewer than 10 category 2 bugs by the end of June. We are on target to achieve that.But going forward there are a number of things that now need to be addressed. Firstly usability to encourage people to use the system online is very important. Secondly the end-of-year and start-of-year issues that we had last year need to be solved. Thirdly we need to close the service gap that has been identified by schools. There has been good progress with the schools. We have done some surveys of the schools and generally they have noticed improvement. But as I said nobody including myself would say at this point that we are satisfied that the project has been satisfactorily remediated.I would like to take the opportunity once again to acknowledge the hard work being done by everybody involved in this system particularly the school administrators but also the teams of people working hard at the ministry at Talent2 and around the place to get the system back on its feet. There has been some heroic work done by any number of people involved in dealing with the challenges that this system has laid out for them. I would also like to thank for their patience—severely tried at times—the staff involved with the issues that have been apparent for individual staff members. Again they have my assurance that we are working as quickly as we can to resolve those issues.Finally I would like to take the opportunity—although I appreciate the opportunity for sober reflection may or may not be available in the House this afternoon depending on how the next speakers—Grant Robertson: I’m as sober as a judge Steven.Hon STEVEN JOYCE: —decide to take their view. No doubt Mr Robertson et al. will immediately decide to disappear back into the political cartoon that is their lives and try to lay political blame where quite clearly as set out in this report there is a much more serious issue for the whole public sector that we need to address. Perhaps it is not too much to hope that at least some of the speakers this afternoon would seek to address that issue rather than laying political blame. But for my money I know that every member of the Government is very disappointed in the outcome of this programme. I personally apologise to the teachers and administrators for the pain and suffering that has been caused to them. They again have my absolute assurance as the Minister responsible for Novopay that we are seeking to address these issues as quickly as possible and that the lessons that are contained in this report will be learnt. Thank you.