Queensland Health's $1.2 billion payroll debacle described as 'great failure in public administration', but Premier vows 'action'

UPDATE: IBM has rejected key findings from the Queensland Health payroll inquiry, as state looks at sacking public servants adversely named in report.

State's Health payroll inquiry ends

PUBLIC servants adversely named by the health payroll inquiry could face the sack while Crown Law advice will be sought on how to deal with those who have since left the government's employ.

Premier Campbell Newman told State Parliament the Public Service Commission had been asked to consider any action that may be taken against public sector employees who were adversely named.

"The commission will ensure the approach to discipline is consistent and that natural justice principles apply."

He said the PSC would also be asked to review the Public Service Code of Conduct and provide recommendations for its amendment, while the the Integrity Commissioner will review the absence of a probity adviser or a conflicts register on the payroll project.

Mr Newman said IBM would also be blocked from entering into new contracts with the government until it improves its governance and contracting practices.

"The State Government will not be entering into any new contracts with IBM until such time as IBM can demonstrate its governance and contracting practices have been strengthened to deal with past misconduct and prevent future misconduct," he told the house.

"I would expect IBM to deal with employees who have been adversely named in the Commission of Inquiry report no matter where they are located in the IBM world.''

Mr Newman said unions would also be asked for information about the oversight of representatives who failed to act to protect rank and file members

Mr Newman also called on Opposition Leader Annastacia Palaszczuk to apologise on behalf of the former Labor government for the payroll bungle.

IBM this afternoon rejected key findings from the Queensland Health payroll inquiry, but said it accepted some responsibility for the disaster.

The Government-commissioned inquiry into the payroll debacle was highly critical of IBM and Health Minister Lawrence Springborg says it found a lot of questionable practises.

``We are looking at options as to whether we should ever contract with them again,'' he said.

Commissioner Richard Chesterman's report found IBM solicited and received information during the tender process that gave it a distinct advantage over its competitors.

IBM had received a ``dry run'' and proposal rehearsal from the man charged with managing the tender process, former IBM employee Terry Burns.

``IBM improperly searched CorpTech (the government's IT arm) information systems ... for information regarding the vendor proposals and the evaluation of those proposals,'' the report said.

Mr Chesterman also said IBM had offered an unrealistically low price, knowing costs would play a big part in the government's decision.

IBM should never have won the contract to build Queensland Health a new payroll system in the first place, the report said.

The IT giant today said it did not accept many of those findings, even though it accepted some responsibility for the disaster as the project's prime contractor.

``IBM operated in a complex governance structure to deliver a technically sound system,'' an IBM spokeswoman said in a statement.

``When the system went live, it was hindered primarily through business process and data migration issues outside of IBM's contractual and practical control.''

The inquiry found the state had hindered the project by failing to properly set out its requirements.

IBM said it's not accountable for the $1.2 billion costs to remedy the system.

IBM's contract blew out from $6.19 million to $25.7 million, but it says the increase accounted for less than two per cent of the $1.2 billion.

Earlier today, Premier Campbell Newman vowed the $5 million health payroll inquiry would not be a waste of time and money, saying 'there will be action'.

The findings of six-month inquiry into the former Labor Government's $1.2 billion payroll system debacle that saw thousands of Queensland Health workers underpaid, overpaid or not paid were handed down on Tuesday, with no disciplinary action recommended.

EDITORIAL: Catalogue of failures could happen again

It has been speculated that the Newman Government may refer some of those named in the report - notably former Public Works director-general Mal Grierson and former Queensland Health director-general Mike Reid - to the Crime and Misconduct Commission.

Mr Newman said there would be 'action' in the form of a motion to State Parliament on Thursday.

"I'm seeking the full support of the Parliament to take the action that is required by this very damning report,'' he said.

"We will be taking action, with the support of the parliament, to discipline people who work in the Queensland public service who have let all of us down.

"We'll be expecting companies to take action against individuals who have let us down.

"I totally reject any suggestion that this shouldn't have been investigated. This is a payroll system that was meant to cost $6 million that cost $1.2 billion and is a damning, continuing reminder of the waste, inefficiency and incompetence of the Bligh Labor Government.''

The Queensland Health payroll system was outsourced by Labor to computer giant IBM but imploded soon after it went live in March 2010.

QUEENSLAND Health's $1.2 billion payroll debacle was one of the greatest failures in public administration in Australia but no charges are expected to be laid and no money will be recovered.

A $5 million, six-month-long inquiry has uncovered dishonest witnesses and buck passing while blaming a sloppy, timid government for failing to recoup losses in the scandal.

Two high-ranking former public servants have been identified as responsible for failing to take on payroll vendor - tech giant IBM - in the courts but no disciplinary action has been recommended against them.

Former Premier Anna Bligh, former Health Minister Paul Lucas and former Public Works Minister Robert Schwarten have been cleared of wrongdoing.

Inquiry head Richard Chesterman, QC, has formally identified the saga as one of the great public administration failures in Australian history.

"The replacement of the Queensland Health Payroll system must take a place in the front rank of failures in public administration in this country,'' Mr Chesterman wrote.

"It may be the worst."

EDITORIAL: Catalogue of failures could happen again

Mr Chesterman has delivered five detailed recommendations including new structures to oversee large projects, control points to monitor project progression and the implementation of an entirely new health payroll system.

The payroll contract was an attempt by the former Labor Government in 2007 to create a labour-efficient pay system for more than 78,000 Health employees by outsourcing the process to IBM.

The new system imploded soon after it went live in March of 2010.

It overpaid, underpaid and failed to pay thousands of workers while requiring about 1000 more workers to process data in an often-chaotic attempt to meet fortnightly pay deadlines.

Premier Campbell Newman is believed to be considering whether to refer some of those named in the report - notably former Public Works director-general Mal Grierson and former Health director-general Mike Reid - to the CMC.

They have both emerged as key figures in the pivotal decision not to pursue IBM for damages after the payroll collapse.

Mr Grierson was found to be largely responsible for the legal settlement with IBM.

"Mr Grierson gave the state the least chance of obtaining satisfaction from IBM and gave IBM the best chance of securing a release from liability,'' Mr Chesterman wrote.

Mr Reid was found not to have ensured the legal settlement was in the best interests of the state:

"He did not examine any of the assumptions - but gave it his endorsement.''

Health Minister Lawrence Springborg denied the inquiry was a political exercise.

He said the inquiry's report would be used to chart a course for the future.

EDITORIAL: Catalogue of failures could happen again

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