Ten years ago, the federal government launched the Phoenix pay system. It was presented as a modernization effort that would save money and make the government more efficient.
Instead, it became one of the most damaging administrative failures in recent Canadian history.
PIPSC’s new report, Phoenix: 10 Years of Failure, examines how this happened, why the crisis continues, and what it tells us about the way complex government systems are being delivered today.
Since 2017, the federal government has spent nearly $5 billion responding to Phoenix-related failures. Nearly $350 million has already been spent developing its replacement. As of late 2025, approximately 238,000 pay transactions remain outstanding. For thousands of public servants, the consequences have meant financial stress, uncertainty, and years of disruption.
Phoenix did not fail because payroll is inherently unmanageable. It failed because internal expertise was cut before the system was ready. Roughly 1,200 experienced pay advisor positions were eliminated prior to launch. Services were centralized. Oversight was reduced. Documented risks were not addressed.
When problems emerged, the internal capacity to correct them had already been dismantled.
Concerns about staffing capacity, system readiness, and implementation pace were raised before Phoenix went live. The Auditor General later confirmed that these warnings were not heeded.
The lesson of Phoenix is not just about payroll. It is about capacity.
It is about what happens when governments reduce the very expertise required to manage complexity at scale. It is about what happens when long-term institutional knowledge is replaced with short-term contracting and outsourcing. It is about what happens when cost-cutting is mistaken for efficiency.
Today, similar pressures are visible across the government. Internal capacity continues to shrink while reliance on external providers grows. At the same time, large-scale digital systems are being developed to deliver pensions, benefits, and other services that millions of Canadians rely on.
When payroll failed, the damage was largely contained within the public service. If similar failures occur in public-facing systems, the consequences would reach far beyond it.
It takes experts to run a country. It takes experienced public servants to design, oversee, and stabilize the systems that Canadians depend on every day.
Phoenix should not be treated as a closed chapter in administrative history.
It is a warning.
Canada cannot afford to repeat this mistake.