2026 Reports of the Auditor General of Canada Modernizing the Pay System
Mr. Chair, thank you for the opportunity to appear before the committee to discuss our report on modernizing the federal government’s pay system, which was tabled this past March. I would like to begin by recognizing that we are meeting on the traditional, unceded territory of the Algonquin Anishinaabe people. With me today are Jean Goulet, the principal responsible for this audit, and Jocelyn Matthews, the director who led the audit team.
In 2016, the government launched the Phoenix pay system and centralized pay services for 46 departments and agencies. The underpayments, overpayments, and delays in receiving pay experienced by many federal public servants have been well documented.
This audit focused on the Human Resources and Pay Transformation Project, which aims to replace Phoenix and 30 human resources systems with a single integrated system called Dayforce. The Treasury Board of Canada Secretariat and Public Services and Procurement Canada have important roles in delivering this project, which is currently estimated to cost approximately $4.2 billion.
Overall, we found that both organizations were managing the project to ensure that public servants’ pay will be accurate and on time once the new Dayforce system is launched. While the audit identified 3 key risks, the secretariat and the department have an opportunity to address them because the project is still in its planning phase.
First, following the implementation of the Phoenix pay system, several lessons learned were identified. Among those was the need to simplify and standardize pay rules and processes before launching a new system to avoid costly and complex customizations. We found that the Treasury Board of Canada Secretariat’s progress on simplifying pay rules has been slow. As a result, Public Services and Procurement Canada is customizing Dayforce to work without simplified rules, at an estimated additional cost of almost $4 million per year.
Second, although there has been progress in clearing the backlog of requests to fix public servants’ pay issues for the first 2 departments transitioning to Dayforce, progress in addressing the overall backlog has been limited. As of September 2025, more than 233,000 pay transactions remained unresolved, affecting over 133,000 public servants served by the Miramichi Pay Centre. If these errors are not cleared before the launch of Dayforce, there is a risk that they could be transferred into the new system, which would undermine its effectiveness from the start.
Third, in January 2026, Public Services and Procurement Canada cut 3 years from the schedule to complete the pay transformation project. This is intended in part to mitigate the cost and complexity of operating 2 pay systems in parallel for several years. However, it significantly shortens the time available to fix existing issues and prepare departments for the transition. It will be important for the department to regularly monitor and mitigate risks that could be caused by the shortened project schedule.
Mr. Chair, this concludes my opening statement. We would be pleased to answer any questions the committee may have. Thank you.