4 Jun 2013

Inquiry faults Education Ministry over Novopay

10:39 pm on 4 June 2013

A ministerial inquiry has blamed the Ministry of Education's lack of experience and poor governance for failures in the problem plagued school payroll system.

The inquiry's report, released on Tuesday, says ministry advice to government ministers about Novopay was inconsistent, over-optimistic and misrepresented the project just before its launch.

The system has been plagued with thousands of errors since it was introduced in August 2012, with underpayments, overpayments or no payments at all to some teaching staff.

Peter Hughes, left, and Steven Joyce.

Peter Hughes, left, and Steven Joyce. Photo: RNZ

An inquiry began in February this year find out what has gone wrong and was one of five measures initiated by Steven Joyce, the Minister responsible for Novopay, along with a technical review and a plan to fix bugs identified. It investigated all aspects of the payroll system, including how it came to be selected.

The report said the Education Ministry's choice of Australian company Talent2 to create Novopay was not inappropriate, but the ministry failed to meet its obligations and did not have the commercial experience required to deal with the Novopay contract.

It criticised software testing conducted by Talent2 and said the cost of Novopay is now $56.8 million, some $24 million more than the expected $23.9 million.

Mr Joyce said government ministers have only limited responsibility and should be able to rely on information received from officials. He said the inquiry's findings would not affect an interim decision to keep Novopay for now, but there would still need to be some fine-tuning to the way it is delivered.

The Government would accept the report's recommendations, which range from boosting the Education Ministry's leadership and governance capabilities to making sure that any major public sector IT projects in the future are managed properly.

The report cites shortcomings by almost everyone involved with Novopay, including Talent2, the State Services Commission and the Treasury.

However, Steven Joyce told Radio New Zealand's Checkpoint programme the Government would have paused before introducing Novopay, were it not for independent advisers telling ministers that it was safe to go ahead and if it had been given the correct version of what independent consultants believed.

The inquiry said a key report to government ministers in June 2012 misrepresented crucial facts, including the view of three people from the Information and Communications Technology Council the Education Ministry asked to give expert opinions on Novopay.

They said there were problems ahead of the system going live in August last year, but the report to Finance Minister Bill English, Education Minister Hekia Parata and Associate Education Minister Craig Foss did not reflect this and was overly optimistic.

Mr Joyce said had the ministers known the truth, they would have had pause for thought. He denied that a lack of ministerial oversight contributed to the problems with Novopay.

Senior staff facing investigation

Acting Secretary for Education Peter Hughes said the ministry misrepresented the development in the payroll system and an independent employment investigation is set to begin for two senior managers who had leadership and management roles in Novopay's development.

"There is a process to be gone through here, we need to be fair to the individuals and we need to do this right. But we need to get to the bottom of what happened and, if accountability is required, for that to happen as well."

Mr Hughes on Tuesday apologised to school staff and government ministers and acknowledged that errors of judgement and wrong decisions have been made. He told Radio New Zealand's Checkpoint programme the Education Ministry accepts that it failed to meet its obligations.

"There are lessons for those of us involved in the leadership of the ministry, there are lessons right across the board, and we will be taking all of those on board.

"This is something that I'm accepting on behalf of all the ministry's staff. We've fallen well short, we've let a lot of people down, we've let ministers down, we've let in particular teachers, principals and staff in schools down."

Mr Hughes said he is writing to school principals and chairs of boards of trustees admitting that the ministry gave poor advice on Novopay and apologising.

Ministers dropped the ball - Labour

The Labour Party said government ministers dropped the ball when they gave the go-ahead for Novopay. Education spokesperson Chris Hipkins said on Tuesday that, though ministry staff are being investigated, that does not absolve ministers of responsibility.

"The ultimate accountability for that rests with the Government. The ministers are the people who are elected on behalf of the people of New Zealand to have oversight of these things and, clearly, they weren't doing their jobs properly either."

Talent2 was awarded the contract under the previous Labour government. Leader David Shearer said he is not worried if his party has to take some of the blame.