The Novopay nightmare

Reflecting on Education Review's biggest topics from the past 20 years


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Novopay was the straw that broke the camel’s back. The year 2012 had already been a turbulent year for schools, so the last thing they wanted was a problem with the Ministry of Education’s new payroll system.

The $30 million system was introduced in August that year. Prior to its implementation Novopay was flaunted as a 21st-century payroll system with many benefits. Plans for Novopay to replace the previous payroll system began years ago, with information released to schools at the beginning of 2009, with an intention to roll out the system by mid-2010. However, in 2010 it was delayed as there were still problems with the system that needed ironing out. Apparently, according to Secretary for Education at the time, Lesley Longstone, a full trial was not feasible prior to launch.

With the benefit of hindsight, a full trial would have been worth the expense and hassle.

NovopayNovopay was proposed to reduce the amount of time spent by schools on managing their payroll and increasing the accuracy of pay for staff. Many schools looked forward to the promise of features such as the ability to easily change personal bank account details, tax codes and email addresses in a seemingly streamlined digital process.

However, not long after its introduction reports soon emerged of staff being underpaid, overpaid or not paid at all; trained teachers paid as untrained teachers; staff paid for work completed at the wrong school; full-timers paid as part-timers, and so on.

For those affected by such mistakes, resolving them has often proved to be just as painful, hence the rather apt moniker ‘Novopain’. Call times to the help centre were reportedly lengthy, and the ‘help’ unhelpful, with more form filling required, leaving many schools with no choice but to reach for their cheque books to pay out-of pocket staff.

In a survey conducted by the New Zealand Principals’ Federation, 45 per cent of participating schools said they had to pay staff themselves to resolve pay issues. The survey found that 79 per cent had been incorrectly paid for the most recent pay round, and 90 per cent reported ongoing problems with Novopay.

The media pounced on the Novopay story. The public were angered at the thought of hard-working teachers not being paid. Longstone took the brunt of the flak and departed the role not long after the fiasco.

Novopay service provider Talent2 took a long time to front up but eventually issued a public apology to schools and all those affected.

In an attempt to smooth troubled waters a roadshow travelled around the country to help schools with Novopay problems, something that should have been put in place from the beginning.

An independent review and Ministerial Inquiry of the Novopay payroll project was put into place. “Minister of Everything” Steven Joyce added Minister for Novopay to his list of portfolios.

The Inquiry, carried out by Sir Maarten Wevers and Deloitte chairman Murray Jack, discovered that Ministry staff recommended the launch of Novopay, despite knowing that the system was not yet functioning adequately. The report found that the State Services Commission did not conduct its monitoring role properly and the government chief information officer was not involved at the level he should have been. The role of the government chief information officer has since been expanded as a result.

Choosing to run with a less than perfect system proved to be catastrophic for some. Two senior Ministry of Education staff members resigned over the findings of the Inquiry. Their resignations followed that of Secretary for Education Lesley Longstone.

A year later, by the end of 2013, the new Secretary for Education at the time, Peter Hughes, reported “steady progress” was being made, although the sector was warned it could be up to two years before the system was completely fixed. The Ministry struggled for a long time chasing thousands of school staff for $10.4 million in overpayments resulting from Novopay blunders.

It was a horrendously costly exercise. While it cost $30 million to develop, it has cost well over that amount to fix the system and compensate staff.

Aside from the expense, the problem with Novopay was mainly its timing – another botched Government decision in a difficult year. The Ministry of Education’s actions in 2012 – the proposed teacher cuts, increased class sizes, charter schools and Christchurch school mergers and closures – left many schools feeling frustrated.

Perhaps in isolation, the implementation of a botched payroll system might have been forgiven, but in the context of so many Ministry decisions that have left the sector feeling rankled, it appeared to be the bitter icing on a bitter cake.

More coverage in Education Review:

Schools have their say on Novopay:

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