As tax season nears, feds freeze Phoenix system changes to help issue proper income slips

https://www.hilltimes.com/2018/12/12/phoenix-fixer-team-gearing-another-tax-season-system-freeze/180848

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The government official in charge of fixing the troubled Phoenix pay system says his department has a “detailed operational plan” that will mean Phoenix will properly print T4 slips this year, after years of public servants faced with inaccurate income statements pulling their hair out during tax season.

Preparations by Public Services and Procurement Canada (PSPC) for the next tax season include an operational freeze on changes to the Phoenix computer system, and informing public servants of their responsibilities, PSPC associate deputy minister Les Linklater told the House Government Operations and Estimates Committee on Dec. 6.

NDP Government Operations Committee vice chair Daniel Blaikie says Phoenix help for MPs’ offices has been pretty ‘hot and cold.’ The Hill Times photograph by Andrew Meade 

He’s the person tasked with fixing the system that was supposed to streamline and consolidate pay among departments, saving about $70-million annually, but so far the government has sunk in more than a billion dollars to get it to work properly. The system has resulted in more than half of the nearly 275,000 federal public servants having pay problems since it was launched in 2016.

Meanwhile, some MPs say they are still frustrated by the lack of support their constituency offices are receiving from Public Service and Procurement Minister Carla Qualtrough’s (Delta, B.C.) office, and efforts continue to reduce the Public Service Pay Centre’s backlog, which as of Nov. 28 was 289,000 open cases of pay problems.

Ms. Qualtrough appeared before the committee with senior PSPC bureaucrats to discuss the department’s additional post-budget spending requests in the Supplementary Estimates A. PSPC asked for almost $61-million total, including $11.8-million going toward Phoenix stabilization.

Tax season has been particularly stressful for overpaid bureaucrats, as it has resulted in incorrect T4 slips, which record an employee’s annual income, that could mean public servants are taxed by the Canada Revenue Agency (CRA) at a higher bracket than they really should be, or have their government benefits reduced.

Additionally, a provision in the Income Tax Act states that if an overpayment is not given back within the same calendar year, the gross payment must be returned, not the net payment actually deposited into one’s account, meaning bureaucrats could be out thousands of dollars for up to a year.

Although the government said in its 2018 budget that it would look into making an exception in order to allow public servants to pay back the net amount, it hasn’t moved forward on legislative changes.

But the budget did offer some reassurance to public servants that they “will not have to start repaying until after the CRA processes their tax return and refunds the excess withholdings” and gave CRA $5.5-million over two years to process Phoenix reassessments.

Mr. Linklater told committee members that PSPC has “a very detailed operational plan with CRA” and has already been doing dry-run testing to be able to properly print the T4s in February.

PSPC has put an operational freeze on any Phoenix system changes between now and the release of the T4s to “ensure that the system stability is there and the inputs that we enter into the system will result in appropriate and correct T4s for staff,” Mr. Linklater told the committee.

Conservative MP Kelly McCauley, pictured right on Dec. 6, says he’s frustrated with the slow response to his constituent Phoenix case inquiries. The Hill Times photograph by Andrew Meade 

The department also continues to work with public sector unions and the Treasury Board Secretariat, the core public service’s official employer, to make sure bureaucrats know their responsibilities in terms of reporting overpayments.

“We’re lowering the stress and providing an opportunity for staff to re-pay the net overpayments as opposed to the gross,” Mr. Linklater told the committee. He meets with unions every six weeks, he added later on in testimony.

The department didn’t respond by deadline to a Hill Times request for more detailed information on the tax-season plan.

Conservative MP Kelly McCauley (Edmonton West, Alta.) said PSPC “seems to be really lacking in being proactive and tackling it.” It’s the workers who suffer from reduced benefits, he added.

Liberal MP and committee vice-chair Yasmin Ratansi (Don Valley East, Ont.) said she trusts the bureaucrats’ plan, “because as an MP I have to rely on the bureaucracy to do their jobs,” adding she’s encouraged to see PSPC is working with unions and Treasury Board to make sure workers know their responsibilities.

NDP MP and committee vice-chair Daniel Blaikie (Elmwood-Transcona, Man.)  said “it’s hard to say” how tax season will go, but he seemed skeptical. Until the government makes the income tax exemption, he said it suggests to him that “they’re not confident of doing the accounting on their end in terms of what people actually owe them” and using taxes to figure it out.

The Hill Times asked the office of Finance Minister Bill Morneau (Toronto Centre, Ont.) about the exemption, but it didn’t respond by deadline.

Tory MP McCauley says constituency support service ‘very slow to respond’

Mr. McCauley said that he’s frustrated by the email “hotline” that is supposed to be helping MPs solve their constituents’ Phoenix issues, saying it’s “very slow to respond.” About half of his casework involves either Phoenix or the CRA, he said, and he uses the dedicated email for MPs pretty much every time someone comes into his office. 

Liberal Government Operations Committee vice chair Yasmin Ratansi says she thinks the Phoenix email ‘hotline’ for MPs is working well, though she admitted she hasn’t used it much. The Hill Times photograph by Andrew Meade

“You’re lucky to get a response within a couple of weeks,” he said. “It doesn’t work.”

After being pressured by MPs during committee appearances earlier this year, Ms. Qualtrough set up an email account to which MP offices can send casework inquiries about Phoenix that goes directly to staff in her office.

During the Dec. 6 meeting Mr. McCauley brought up a constituent whom he said has particularly bad Phoenix issues, saying the government is trying to claw back overpayment from one cheque, despite her really being underpaid on another, which is against Treasury Board policy.

Mr. McCauley said he has been trying to solve the issue using the email system, but it hasn’t worked. Mr. Linklater said the policy hadn’t changed and told Mr. McCauley to forward him the names.

Mr. Blaikie agreed the resources for MPs offices have been pretty “hot and cold.” Broadly, he’s still hearing a lot of frustration from public servants and unions on new cases, he said.

“There are periods where we can get a timely response and that’s great,” he said. “And then it’s gone cold. It came back a little bit, but it hasn’t been very consistent in terms of the quality of support that’s been provided.”

Ashley Michnowski, a spokesperson for Ms. Qualtrough, said the government has increased capacity by 1,500 people at the Public Service Pay Centre in Miramichi, N.B., which is the main place where the government is dealing with Phoenix pay cases, and is seeing progress. Liberal MP Steven MacKinnon (Gatineau, Que.), Ms. Qualtrough’s parliamentary secretary, said from anecdotal evidence, the number of Phoenix cases are down “across MPs’ offices” because a new pay pod system used to triage the cases at the pay centre is working to stay current on inflow, using leftover time to reduce the backlog.

This system allows for certain parts of the pay centre, called “pods,” to service particular departments, which helps pay advisers to develop expertise in the pay rules affecting their respective department, and address problems employee by employee. A six-month pilot program resulted in a 30 per cent reduction in the backlog for piloted departments.

From anecdotal evidence, most inquiries are coming from MPs checking in on unsolved cases, said Mr. MacKinnon. To frustrated MPs, he said he has “every sympathy” and is determined to get rid of the backlog.

“It’s very hard if all you’re doing is following up on cases, to actually solve cases,” he said, adding it’s a balance.

Ms. Ratansi said the MP email is working well, but admitted she hasn’t used it much.

New repair teams to be put in place across pay centre by spring

All 46 departments serviced by the Public Service Pay Centre are expected to be brought onto the “pay pod” system by spring 2019, Ms. Qualtrough told the committee, which is expected to further speed up the reduction of the backlog of open pay cases at the centre.

The backlog was reduced by 14,000 cases in the last month or so, from 303,000 cases on Oct. 31 to 289,000 cases on Nov. 28. That follows along a continued decline in recent months. Since January 2018, it has been reduced by 130,000 cases, said Ms. Michnowski.

Still, there are almost 500,000 cases awaiting processing at the pay centre, including 84,000 cases with no financial impact, such as name changes, and 14,000 collective agreement implementation transactions, meaning pay changes resulting from new contracts being signed between unions and management. 

All of the 27 core public service contracts had expired when the Liberals came to power in 2015. With most settled in the last two years, this resulted in several years of retroactive pay.

Because Phoenix doesn’t do retroactivity well, the contracts have needed to be implemented manually—a time-consuming process, as pay advisers need to take the data out of the old pay system and input it into Phoenix.

ehaws@hilltimes.com

The Hill Times