Senate Legal and Constitutional Affairs Legislation Committee, , 1:37:46 to 1:46:10
Examination of the nearly $1 million spent on consultants including KPMG and Cordamenta to address systemic payroll issues and underpayments within NEMA.
Topics: Government spending, Efficiency dividend
Speakers: Mr Pat Hetherington, Senator David Pocock, Sanandan Dasgupta, Senator Jana Stewart, Unknown Speaker
Thank you, Chair. I just want to come back to the underpayments and payroll issues that we've been talking about for the last few estimates. Initially NEMR execs tried to tell the Senate that it was limited to one or two staff. Clearly it's it's not assessments. How much has been spent on consultants to date?
I might um I might pass to the Chief Operating Officer just to walk through some of those details. But I whilst he finds those figures, Senator, just in terms of an update since last estimates. We've looked at some of the enterprise agreement terms and conditions that we think were driving potentials inaccurate pay outcomes. We've sought legal advice around those to settle the application of those enterprise agreement terms. We've uh you will recall from I think previous evidence that we had some issues around the way people were reporting concerns in payroll. It was going to multiple inboxes, sometimes to personal inboxes, sometimes to home affairs, sometimes to us, which I think was one of the key failings in understanding the themes that were emerging in in payroll concerns. We've since rolled out a singularity.
Do you not have a HR?
I'm coming, I'm coming to book done. So we do have HR, but we are a shared service with home affairs, so home affairs manage our payroll system. And so historically, what has happened is you've had staff who've sent queries to home affairs to the payroll system. They've sent it to our HR area. They've sent it to individuals that they they know in a HR space. We haven't had that singular view of the issues that are impacting on payroll.
Sorry to cut in here again. You've got what 120 staff?
In NEMA. In NEMA, about 400 in NIMA.
Like how is there not just an email to all the staff saying, hey, if you have payroll issues? Email this email address. Like how do we get to this point?
So there is so there is there is very much now a clear singular point for the first time.
Why is it taking so long? You know, we're paying execs half a million bucks or so to and so I mean there's a few things.
First of all, you've got um you'd have a workforce who know about shared services arrangements. They may have contacts and colleagues who work in home affairs, for example, in HR area. They may have uh colleagues that they know in our HR area. So notwithstanding comms out to people about hey, report your HR payroll concerns here, people will choose a multitude of paths in order to do that.
Um particularly especially when it doesn't seem like they're being taken seriously. But can we just go to the number first?
I understand that you you might be a little frustrated.
It's chewing up my time.
Yeah, no, I I I um appreciate that, but officials at the table are entitled to answer questions without interruption.
Question wasn't about this, though, it was about the the number.
You also uh can't direct officials how to answer your questions. Uh if we can please proceed with you asking the questions and giving the official at the table the time to respond, I'd be grateful.
Sure. Thank you, Chair. Thank you for the question. The question was um how much has been spent on consultants today.
Uh Senator, uh we have uh paid uh cordamenta, so this is as at 31st of August exclusive GST. So we had to pay we have paid cordamenta for payroll remediation work of uh uh 300,000. Uh we have paid cordamenta for payroll review work 252164. Uh we have uh paid KPMG to do the uh internal audit compliance review 372500. So the total figure, all these add up to 92464.12 exclusive GSD.
Okay, thank you. Um everything's sorted now after spending almost a million dollars of payroll issues been sorted or are they still outgoing, ongoing uh unresolved issues.
There are still some uh ongoing unresolved issues, Senator.
How is that the case?
Well, I mean in terms of I mean it's very easy to oversimplify what it takes to address uh a payroll issue of 400 people over multiple years where terms and conditions across each pay could be different. I don't want to un I don't want to give you the impression that this is a simple just go in and fix a single individual's pay. There are a multitude of allowances uh available to people, a multitude of different um terms and conditions, about 110 business rules over an extended period of time. So it is a complex endeavor. That would be the first point I'd make. Um what I was talking about before was the progress that we have made today. We have um assured ourselves that we have an agreed understanding of the terms and conditions in our enterprise agreement. We have worked through, and part of the quarterment of work was working through where there were discrepancies between our payroll system, the system that actually makes pay to people and our terms and conditions in the enterprise agreement. Um we have made the difficult decision to take our payroll services to a shared service provision under um the Department of Industry who service, I think about 17 clients across the commonwealth in order to set up a payroll system that is properly aligned to our enterprise agreement going forward. We're in the process of transitioning our payroll services across to a new service provider to make sure that going forward we don't have any of these problems, that every time there's an update to our enterprise agreement, um, that that is done accurately and as it relates specifically to NEMA. So setting up the future, there were there um are available to us. Having that was the first protocol, so it's been an enormous amount of effort that's gone into that, understanding the system, understanding discrepancies in the payroll services, understanding how to properly configure our payroll system going forward, and transitioning to a new provider, which will take place in the next couple of months. Having fixed the problem going forward, then we can turn our mind to the remediation of past pay issues, and there are a couple of options available to us, and we are still assessing which of those is the most effective and efficient use of Commonwealth resources. They could look like taking our new newly configured payroll system and washing all the historical data through that system and determining where there are discrepancies between what it should have been and what it was. That's one option. That's a big undertaking. Or it could look like through analysis of parallel payroll processing where we run payroll in the new system and we compare that to the old system, honing in on particular areas and creating a standalone model that do that. So I'm trying to give you the impression that a lot of work has happened. This is not a simple endeavor just to resolve. And I'm I remained.
If you if you're gonna have to do that to figure out how to actually solve it, what did the million dollars get us?
So the in the first time.
But we've shelled out a million bucks to get us to this point.
Indeed. And I remain uh comfortable that that expenditure has been valued for money. The KPMG report uh was the first insight into the systemic nature of it, and which we've released um uh uh uh in a question on notice to this committee where they did a thorough analysis of all the various issues that could be impacting on payroll. That was an important piece of work to get done so that we could understand the magnitude of it, the size scale of it, the work with quartermenta, they've been assisting us in um leading to the resolution. So the configuration of systems has all been a part of that work. Okay, which as I say is no small endeavor.