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Access Request CBRC Dec No. 3'136 Copy No. 128 F:M 0_6!12/201 0 Leader of the Opposition Official Copy - 30/10/2012

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CONFIDENTIAL

CABINET BUDGET REVIEW COMMITTEE

DECISION

Brisbane, 6 December 2010

Decision No.: 3136, (Submission No.: 4061)

TITLE: Fortnightly Progress Report Three - Implementation of Government's response to the Auditor-General's report on the Queensland Health payroll issues

COMMITTEE noted Queensland Health's progress toward implementing the Government's response to the Auditor-General's report on the health payroll issues.

CIRCULATION: Implementation Responsibility Department of Health and copy to the Deputy Premier and Minister for Health

Departmental Records Department of the Premier and Cabinet Treasury Department

Perusal and Return All other Committee Members

Acting Cabinet Secretary

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TITLE

Fortnightly Progress R~port Three - Implementation of Government's response to the Auditor-General's report on the Queensland Health payroll issues

MINISTER

Deputy Premier and Minister for Health

OBJECTIVE

That the Cabinet Budget.Review Committee (CBRC) note the Queensland Health progress of the implementation of the Payroll Improvement Program, in response to the AuditorGeneral's report on the health payroll issues.

SUMMARY

Queensland Health has significantly progressed the Government's response to the implementation of the Auditor-General's report on the health payroll issues.

There were five components to the Government's response to the recommendations contained in the Auditor-General's report, with three of these the responsibility of Queensland Health: Better Payroll Model (QH); Best Software System (QH); Holding IT Advisors Accountable; Strengthening Queensland Health Corporate Services (QH); and The Future of Corp Tech and Shared Services.

The new Payroll Operating Model has been significantly implemented with two payroll hubs (Townsville and Meadowbrook) fully operating under the new model providing services to the Townsville, Mount Isa and Metro South Districts. In all other hubs, four out of the five core components have been implemented with the remaining component to be implemented before 31 December 2010.

Managers have been appointed to the two new hubs being established in Mackay and Gold Coast with approximately 40 staff within the hub on the Gold Coast located near the Gold Coast Hospital. The Gold Coast team still works closely with the Chermside payroll hub to ensure continuity and support. In Mackay district, a payroll hub manager has been appointed (based in Mackay) and the hub is now operating with dedicated resources that are based in both Mackay and Rockhampton, pending finalisation of accommodation in Mackay. The personalised service model is operating directly between the Mackay district and the hub. The Mackay payroll work has now been separated from the Central and Central West District work which is undertaken within the Rockhampton hub.

Due to time contraints, the key statistics that formed Fortnightly Progress Report Two (pay period 20 October) are at Attachment 4.

This document is the property of the Government that created it and is held in trust by the Public Service. It may not be copied or reproduced. For further information contact the Cabinet Secretariat.

CABINET-IN-CONFIDENCE

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The number of no pays is steadily declining on average as the backlog of adjustments are cleared. Of particular note is that from June 2010 to the most recent pay period (3 November 2010), the total number of confirmed no pays has reduced from 200 to 45. These remaining no pays can be attributed to delays in the submission and processing of payroll forms (e.g; new starters, casuals). Supporting information is provided at Attachment 1 of this submission.

Additionally, the number of outstanding adjustments (backlog) has been steadily reducing over the past 11 pay periods. For example, on 2 June 2010 there were 42,088 outstanding adjustments and this number has been reduced to 8,778 as at 3 November 2010: As occurred in the previous Lattice system, the system is closed off for processing for 2-3 days; so there will typically be 2-3 days of processing backlog in any given pay period. Supporting information is provided at Attachment 2 of this submission. Outstanding adjustments have to date included future leave forms. This period's figure now reflects a true outstanding adjustment figure, with future leave forms isolated from the total.

The number of calls received by the payroll hotline significantly reduced over the six pay runs between 14 July 2010 (2506 calls) and 6 October 2010 (639 calls) and have now stabilised to represent what could be considered normal business levels of enquiry. Supporting information is provided at Attachment 3 of this submission.

The Queensland Health Corporate Services Division has been reorganised with the two new Deputy Director-General positions with the recent advertising closing date of 25 October 2010. Interviews are currently underway for the Deputy Director-General - Human Resource Services and it is anticipated that an offer will be made by end November 2010. Interviews for the Deputy Director-General - Finance, Procurement and Legal Services are scheduled for end November 2010.

Consultation with payroll staff, districts, divisions and unions continues extensively throughout the state. Consultation includes face-to-face meetings, teleconferences, forums and regular scheduled meetings.

Government has received the Ernst and Young report into the future of the rostering and payroll applications and the report and a response will be released (following consideration by Cabinet) at the end ofNovemb~r 2010 along with the report.

At this point, overpayments remain , the highest risk area for the Payroll Improvement Program as the number and value of the overpayments continues to increase. The recovery of overpayments has not yet commenced, however staff can voluntarily initiate repayment. A commitment has been made to not commence the recovery of overpayments until the payroll system is stabilised.

As there is no data regarding the performance of the previous payroll system, agreement has not been able to be reached with unions regarding the stabilisation of the system which is a pre-cursor to the union agreement to commence recovery of overpayments. Detailed work is currently being undertaken to describe the current performance of the payroll system.




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As at 31 October 2010, the total value of overpayments was $43.8 million with $34.4 million within the payroll system and $9.4 million within the finance system (i.e. cash, cheque or EFT). Within the total overpayments is $1.31 million relating the write-off of cumulative overpayments of up to and including $200 net as at 30 June 2010. The number of cash payments being made to employees has reduced significantly over the past several pay periods, supporting a return to a "business as usual" environment in regard to the number of no pays in any given pay cycle - refer to Attachment 1. Queensland Health has commenced discussions with health unions to realign cash, cheque and EFT payments with normal payroll processing operations.

RESULTS OF CONSULTATION

Is there agreement? YES.

RECOMMENDATION

That the Cabinet Budget Review Committee note the Queensland Health progress toward implementing the Government's response to the Auditor General's report on the health payroll issues.

PAUL LUCAS MP Deputy Premier Minister for Health I) I lt /2010




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BODY OF SUBMISSION

OBJECTIVE

1. That tp.e Cabinet Budget Review Committee (CBRC) note the Queensland Health progress of the implementation of the Payroll Improvement Program, in response to the Auditor-General's report on the health payroll issues.

BACKGROUND

Context

2. On 8 March 2010, Queensland Health introduced a new payroll system that delivered its first pay on 24 March 2010. The new payroll system has resulted in significant issues in the timeliness and accuracy of Queensland Health staff pay.

3. In response to the major issues identified, a Payroll Stabilisation Program was established with the assistance of KPMG and significant work was undertaken to refine the business process, improve the system, communicate with stakeholders and respond to individual hardship. ·

4. In July 2010, the Payroll Stabilisation Program transitioned to the Payroll Improvement Program with additional improvement activities commenced.

5. On 29 June 2010, the Auditor-G~neral released his report, Report to Parliament No 7 for 2010 - Information systems. governance and control, including the Queensland Health Implementation of Continuity Project.

6. The Queensland Government released a response to the report that contained five key elements: a) Better Payroll Model (QH) b) Best Software System (QH); c) Holding IT Advisors Accountable; d) Strengthening Queensland Health Corporate Services (QH); and e) The Future of Corp Tech and Shared Services.

7. The implementation of three· of the five initiatives are the responsibility of Queensland Health.

8. On 8 October 2010, the Premier wrote to the Deputy Premier and Minister for Health to request fortnightly CBRC reports to commence on 18 October 2010 by way of flying minute.


CABINET.:JN-CONFIDENCE


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Previous Consideration by Cabinet

9. Last report 1 November 2010.

ISSUES

Recent I Current Issues

Involvement of Queensland Police

1 0. Queensland Health introduced emergency cash payments for staff in financial need after the introduction of the new payroll system to ensure no staff members were out of pocket.

11. These cash payments are being progressively reconciled against the electronic pay records of staff. A small number of Queensland Health staff have taken advantage of these emergency cash payments for their own personal gain by seeking emergency cash payments despite having already been paid in full. It is both appropriate and a legal obligation for Queensland Health to act in cases of suspected fraud.

12. The cash payment irregularities are referred to the Ethical Standards Unit for review and then referred to the QPS. To date twenty three matters have been referred to the Queensland Police Service (QPS) and two staff members have been charged by the QPS. One Queensland Health staff member has already admitted to misappropriating more than $20,000 and has been convicted by the Courts. . .

13. The Chairperson of the CMC has written to the Director-General of Queensland Health to commend the agency on its approach to dealing with this issue.

Status of Payroll Processing .

14. On average, approximately 4,000 pay system transactions are processed every day. Anecdotal evidence suggests that a similar number of transactions were performed each day under the previous Lattice payroll system.

15. The number of adjustments that are outstanding at the end of each Pay Cycle is typically between 8,000 and 12,000 transactions. This figure represents the 2-3 day processing time that is lost at the end of each pay cycle due to the need to close off the payroll system while processing payments.

16. In terms of identifying the. number of staff with payroll errors we rely on staff advising Line Managers and Payroll Officers. Queensland Health staff can make appointments with Line Managers and Payroll Officers about a vast range of issues including payroll errors, leave entitlement enquiries, taxation advice, and interpretation of payroll policy. Therefore, there is no precise process available for measuring the number of staff who have pay errors.




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17. It has been recognised that a large number of staff have been affected by the transaction backlog experienced in the early days of the new payroll system. The transaction backlog between pay periods has now been cleared. As a result of clearing this transaction backlog between pay periods, staff are experiencing a higher level of accuracy in payments. The accuracy of payments to staff have also been improved over the past 4-5 months as a result of changes being progressively made to the payroll system such as changes to the way superannuation is calculated, Enterprise Bargaining updates including allowance updates and employee pay rates.

18. Planning is in progress for the Christmas I New Year payroll processing, whereby the pay cut-off period will be truncated due to bank closures as a result of the public holidays. This period will also see an increase in payroll forms volume due to leave, casual and temporary employee forms processing.

No Pays

19. The issues surrounding the implementation of the new payroll system, including the unavailability of the system for most of the first pay cycle in March 2010, created a large backlog in payroll forms processing. This resulted in many staff not receiving their pays from the system and an emergency payment system was implemented which provided cash, cheque and EFT payments to affected staff.

20. The number of "no pays" has steadily declined on average as the backlog of adjustments has been cleared. Note that from June 2010 to the most recent pay period, the total number of confirmed no pays has reduced from 200 to 45.

21. According to information from the past 6 pay periods, the reported "no pays" figure has not been the result of system errors. Delays to the submission and processing of payroll forms (e.g. new starters, casuals) by line managers has meant that these forms have not been included in the normal pay run and these staff are typically paid via adhoc processing which has an overnight turnaround.

22. Attachment 1 identifies the number of number of no pay inquiries and confirmed no pays against pay run file from beginning June 2010.

Adjustments

23. The number of outstanding adjustments (backlog) has been steadily reducing over the past 12 pay periods. For example, on 2 June 2010, there were 42,088 outstanding adjustments and this number has been reduced to 8,778 as at 3 November 2010. Attachment 2 provides details. · Outstanding adjustments have to date included future leave forms. This period's figure now reflects a true outstanding adjustment figure, with future leave forms isolated from the total.

24. Due to the need to close off the payroll system for fortnightly processing for 2-3 days, as occurred under the previous Lattice payroll system, there will typically be 2-3 days of processing backlog in any giv~J;l pay period. The quoted backlog reflects this.




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25. The average number of transactions processed per day is approximately 4,000 so a typical backlog would represent approximately 8,000 - 12,000 adjustments.

26. As part of the implementation of the new payroll operating model, all payroll forms are now assigned specifically to the payroll hub responsible for processing forms relating to its local District or Division staff. This will ensure each payroll hub has direct visibility and ownership of unprocessed payroll adjustments and can escalate for assistance if required from central state-wide support teams.

Overpayments

27. Post implementation overpayments remain the highest risk area for the Payroll Improvement Program as the number and value of the overpayments continues to increase. The recovery of overpayments has not yet commenced, however staff can voluntarily initiate repayment. A commitment has been made to not commence the recovery of overpayments until the payroll system is stabilised.

28. As there is no data regarding the performance of the previous payroll system, agreement has not been able to be reached with unions regarding the stabilisation of the system which is a pre-cursor to the union agreement to commence recovery of overpayments. Detailed work is currently being undertaken to describe the current performance of the payroll system.

29. As at 31 October 2010, the total value of overpayments was $43.8 million with $34.4 million within the payroll system and $9.4 million within the finance system (i.e. cash, cheque or EFT). Within the total overpayments is $1.31 million relating the write-off of cumulative overpayments of up to and including $200 net as at 30 June 2010.

30. The number of cash payments being made to employees has reduced significantly over the past several pay periods, supporting a return to a "business as usual" environment in regard to the number of no pays in any given pay cycle. Queensland Health has begun discussions with health unions· to realign cash, cheque and EFT payments with normal payroll processing operations. It is planned that emergency cash payments outside the payroll system will be ceased in the near future.

31. Letters have been sent to all staff who are eligible for the $200 overpayment waiver. Staff who have paid the overpayment back to Queensland Health will be reimbursed and staff who owe the $200 will have it waived.

32. A team is currently being established to identify, document and calculate all identified overpayments in preparation for the overpayment recovery process. Once this process has been sufficiently advanced, further discussions with unions will be held to enable the commencement of the recovery process. It is anticipated this process will commence in the first quarter of 2011.

33. Discussions have also commenced with umons in relation to recovery of overpayments from terminated employees.

This document is the property of the Government that'created it.and is held in trust by the Public Service. It may not be copied or reproduced. For further information contact the Cabinet Secretariat.



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Hotline Calls

34. The number of calls received by the payroll hotline significantly reduced over the six pay runs between 14 July 2010 (2506 calls) and 6 October 2010 (639 calls) and have now stabilised to represent what could be considered normal business levels of enquiry. Supporting information is provided at Attachment 3 of this submission.

35. Call volumes have increased at the end of this pay fortnight compared to recent pay periods, largely due to staff enquiries regarding the $200 overpayment waiver and P A YG Summary requests.

Payroll Operating Model

36. Queensland Health has significantly progressed the Government's response to the implementation of the Auditor-General's report on the health payroll issues.

37. The new Payroll Operating Model has been significantly implemented with two payroll hubs (Townsville and Meadowbrook) fully operating under the new model providing services to the Townsville, Mount Isa and Metro South Districts. In all other hubs, four out of the five core components have been implemented with the remaining component to be implemented before 31 December 2010. The following table outlines the progress of the implementation of the payroll operating model.

Payroll Staff Personalised Local Aligned Agreed

New Payroll Operating Trained in Service Model Workflow Hub and Communication SAP and of Forms District and Governance

Model Workbrain Structure Processes

Cairns and Hinterland Health ../ ../ ../ Dec 10 ../

Service District Cape York Health Service ../ ../ ../ Dec 10 ../

District Central Queensland Health ../ ../ ../ Dec 10 ../

Service District Central West Health Service ../ ../ ../ Dec 10 ../

District Childrens Health Services ../ ../ ../ Dec 10 ../

Darling Downs -West Moreton ../ ../ ../ Dec 10 ../

Health Service District Gold Coast Health Service ../ ../ ../ ../ ../

District Mackay Health Service District ../ ../ ../ ../ ../

Metro North Health Service ../ ../ ../ Dec 10 ../

District Metro South Health Service ../. ../ ../ ../ ../

District Mt lsa Health Service District ../ ../ ../ ../ ../

South West Health Service ../ ../ ../ Dec 10 ../

District Sunshine Coast- Wide Bay ../ ../ ../ Dec 10 ../

Health Service District

--This document is the property of the Government that created it and is held in trust by the Public Service.

It may not be copied or reproduced. For further information contact the Cabinet Secretariat.



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New Payroll Operating Trained in Service Model Workflow Hub and Communication SAP and of Forms District and Governance


Torres Strait and Northern .;' .;' .;' Dec 10 .;'

Peninsula Health Service District Townsville Health Service .;' .;' .;' .;' .;'

District

38. Managers have been appointed to the two new hubs in Mackay and Gold Coast with approximately 40 staff within the hub on the Gold Coast located near the Gold Coast Hospital. This latter team still works closely with the Chermside payroll hub to ensure continuity and support. In Mackay district, a payroll hub manager has been appointed (based in Mackay) and the hub is now operating with dedicated resources that are based in both Mackay and Rockhampton, pending finalisation of accommodation in Mackay. The personalised service model is operating directly between the Mackay district and the hub. The Mackay payroll work has now been separated from the Central and Central West district work which is occurring within the Rockhampton hub.

39. All districts have personalised access to their linked payroll hub to resolve payroll questions and issues. Contact can be made directly with the payroll hub or scheduled appointments can be made to resolve more complex issues.

40. 151 payroll staff across the state have had full training in SAP and a further 534 training events have been held for specific functions of SAP. 785 payroll staff have been fully trained in Workbrain. This will ensure that all forms can be processed by the district's linked payroll hub.

41. A web based payroll portal, to complement the existing fax server forms processing, is being trialled and will strengthen the personal link between the district and the payroll hub when it is implemented in the near future.

42. In line with our commitment to payroll staff, a job re-evaluation process is being undertaken across the state. The job re-evaluation process is developing new position descriptions in line with the new payroll model. These position descriptions will be evaluated and payroll staff remunerated accordingly.

43. Work to further improve the readability ofpayslips and enhance the roster output has begun. Extensive staff consultation will occur across the state over the next three months.

This document is the property of the Governmen'tthat created it and is held in trust by the Public Service. It may not be copied or reproduced. For further information contact the Cabinet Secretariat.

. CABINET-IN-CONFIDENCE


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Strengthen Queensland Health Corporate Services

44. The Queensland Health Corporate Services Division has been reorganised with two new Deputy Director-General positions (Finance, Procurement and Legal Services and Human Resource Services) recent advertising. closing date of 25 October 2010. Interviews are currently underway for the Deputy Director-General- Human Resource Services and it is anticipated that an offer will be made by end November 2010. Interviews for the Deputy Director-General - Finance, Procurement and Legal Services are scheduled for end November 2010.

45. An acting DDG Finance, Procurement and Legal Services has been appointed to the newly created division while recruitment occurs.

46. The newly structured corporate services will strengthen Queensland Health's ability to deliver a more localised model of service in line with the national health reform agreement.

Ernst & Young Report - Best Payroll System

4 7. Ernst & Young were engaged to undertake a review of the Queensland Health payroll and rostering systems to:

o establish their ongoing suitability for Queensland Health; and

o ascertain what alternative solutions are available to potentially resolve the problems being experienced across the organisation.

48. The final Ernst & Young Report was received by the department on 30 September 201 0 and a formal response will be released, following consideration by Cabinet, at the end of November 2010 along with the report.

49. Queensland Health has briefed the health unions on the Ernst & Young report and is preparing a draft response for consideration.

50. The report recommends that the, current Queensland Health payroll system improvement work, namely the Payroll Improvement Program continue, with a further program of work to being undertaken to optimise the existing solution environment (ie undertake an "optimise" project of the current systems to resolve all current issues and improve usability at the local level). This recommendation was identified by Ernst & Young as the most effective and efficient with lowest risk to the organisation.

51. Discussions are currently occurring with Ernst & Young to request them to draw a distinction between those matters recommended as being necessary to ensure the system is suitable for purpose and those recommendations which would optimise the system, but may not necessarily improve the system.


CABINET-IN.;CQNFIDENCE


11

52. These discussions will include separating the recommendations into phases of work in order to identity the program of work and associated timeframes involved in providing the modifications required to deliver a sound operational system suitable for purpose, versus balancing these requirements against providing a 'best practice' or 'optimised' system. For example, phase 1 may include re-architecture of the system to manage leave, reconfiguring of system to separate into groupings of up to say 15,000 employees and phase 2 may include introduction of employee self service (ESS) or manager self service (MSS). -

CONSULTATION

53. Consultation with payroll staff, districts, divisions and unions continues .extensively throughout the state. Consultation includes face-to-face meetings, teleconferences, forums and regular scheduled meetings.

54. Ernst and Young presented their report and possible strategies for implementation of their recommended option to the all unions meeting on Monday 1 November 2010 as part of the consultation between Government, Queensland Health and Unions.

55. Following the all unions briefing on 1 November 2010, the Queensland Nurses Union (QNU) prepared a newsletter for their members which fairly represented the Ernst and Young briefing and indicated its eagerness to obtain the report when released by Government.

56. Meetings with all health unions are scheduled fortnightly on the Monday of the pay week. Topics covered include overpayments, concurrent employees, implementation of the payroll operating model, system fixes, progress on improvement projects including the roster redesign project, payslip redesign project, payroll portal project, payslip distribution project and payslip software analyser project.

57. Regular report-back hearings are scheduled with the Queensland Industrial Relations Commission (QIRC) with the last hearing being held on 7 October 2010 and the next hearing scheduled for 2 December 2010.

58. At the most recent QIRC hearing, the topics covered were: feedback on the line manager support regarding payroll; feedback on systems issues that have been fixed; discussion regarding changing the arrangements for emergency cash payments, the Ernst and Young and PricewaterhouseCoopers reports; concurrent employees and the implementation of the payroll operating model.

FINANCIAL CONSIDERATIONS

59. As at 31 October 2010, the total value of overpayments was $43.8 million with $34.4 million within the payroll system and $9.4 million within the finance system (i.e. cash, cheque or EFT): Within the total overpayments is $1.31 million relating the write-off of cumulative overpayments of up to and including $200 net as at 30 June 2010.




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60. A Ministerial Statement was released on 14 July 2010 advising that Queensland Health would not be requiring staff with overpayments of $200 net or less, incurred since the introduction of the new payroll system and up to 30 June 2010, to pay these amounts back.

61. Queensland Health is preparing a Short Form Treasury Submission for 2010/11 through to 2013/14 financial years for funding the Payroll Improvement Program and proposed work resultant from the Ernst and Young and PricewaterhouseCoopers reports which are being considered by Government.



LIST OF ATTACHMENTS

ATTACHMENT 1:

ATTACHMENT 2:

ATTACHMENT 3:

ATTACHMENT 4:

No Pay Inquiries/Confirmed No Pays Table.

Outstanding Adjustments

Payroll Hotline Calls

Key Statistics from Fortnightly Progress Report Two

P~yperiod

Total number of no-pay inquiries (on same day following pay dayDay 3)

Total number of no-pays confirmed against pay run file (on same day following pay day- Day 3)

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Payroll Hotline Information

• The payroll hotline shows a significant reduction in the number of calls received. The reduction in the number of calls received each fortnight coincides with the commencement of the Payroll Improvement Program.

lnfoService Centre- Payroll Hotline Pay Cycle (Fortnight) Call Volumes 9th April- Oct 2010

1st Pay- 2nd Pay- 3rd Pay- 4th Pay- 5th Pay- 6th Pay- 7th Pay- 8th Pay- 9th Pay- 10th Pay- 11th Pay- 12th Pay- 13th Pay- 14th Pay- 15th Pay- 16th Pay 24/03/10 7/04/10 21/04/10 5/05/10 19/05/10 2/06/10 16/06/10 30/06/10 14/07/10 28/07/10 11/08/10 25/08/10 8/09/10 22/09/10 06/10/10 20/10/1

ATTACHMENT 4

Current Issues for CBRC Fortnightly Report No 2

Involvement of Queensland Police Service

1. Queensland Health introduced emergency cash payments for staff in financial need after the introduction of the new payroll system to ensure no staff members were out of pocket.

2. These cash payments are being progressively reconciled against the electronic pay records of staff. A small number of QH staff have taken advantage ofthese emergency cash payments for their own personal gain by seeking emergency cash payments despite having already been paid in full. It is both appropriate and a legal obligation for Queensland Health to act in cases of suspected fraud.

3. The cash payment irregularities are referred to the Ethical Standards Unit for review and then referred to the QPS. To date twenty matters have been referred to the Queensland Police Service (QPS) and two staff members have been charged by the QPS. One QH staff member has already admitted to misappropriating more than $20,000 and has been convicted by the Courts.

4·. The Chairperson of the CMC has written to the Director-General of Queensland Health to commend the agency on its approach to dealing with this issue.

No Pays

5. The issues surrounding the implementation of the new payroll system, including the unavailability of the system for most of the first pay cycle in March 2010, created a large backlog in payroll forms processing. This resulted in many staff not receiving their pays from the system and an emergency payment system was implemented which provided cash, cheque and EFT payments to affected staff.

6. The number of "no pays" has steadily declined on average as the backlog of adjustments has been cleared. Note that from June 2010 to the most recent pay period, the total number of confirmed no pays has reduced from 200 to 40.

7. According to information from the past 5 pay periods, the reported "no pays" figure has not been the result of system errors. Delays to the submission and processing of payroll forms (e.g. new starters, casuals) by line managers has meant that these forms have not been included in the normal pay run and these staff are typically paid via ad-hoc proc-essing which has an overnight turnaround.

8. Appendix 1 identifies the number of number of no pay inquiries and confirmed no pays against pay run file from beginning June 2010.

Adjustments

9. The number of outstanding adjustments (backlog) has been steadily reducing over the past 11 pay periods. For example, on 2 June 2010, there were 42,088 outstanding adjustments and this number has been reduced to 8,341 as at

20 October 2010. Appendix 2 provides details. Outstanding adjustments have to date included future leave forms. This period's figure now reflects a true outstanding adjustment figure, with 6128 future leave forms isolated from the total.

10. Due to the need to close off the payroll system for fortnightly processing for 2-3 days, as occurred under the previous Lattice payroll system, there will typically be 2-3 days of processing backlog in any given pay period. The quoted backlog reflects this.

11. The average number of transactions processed per day is approximately 4,000 so a typical backlog would represent approximately 8,000- 12,000 adjustments.

12. As part of the implementation of the new payroll operating model, all payroll forms are now assigned specifically to the payroll hub responsible for processing forms relating to its local District or Division staff. This will ensure each payroll hub has direct visibility and ownership of unprocessed payroll adjustments and can escalate for assistance if required from central state-wide support teams.

Overpayments

13. Post implementation overpayments remain the highest risk area for the Payroll Improvement Program as the number and value of the overpayments continues to increase. The recovery of overpayments has not yet commenced, however staff can voluntarily initiate repayment. A commitment has been made to not commence the recovery of overpayments until the payroll system is stabilised. As there is no data regarding the performance of the previous payroll system, agreement has not been able to be reached with unions regarding the stabilisation of the system. Detailed work is currently being undertaken to describe the current performance of the payroll system.

14. Since go live, approximately $38.6 million in total of salary overpayments and cash advances have been made to employees. A write-off of $1.31 million of this amount which comprises overpayments of $200 net or less has been approved as the cost of recovering would exceed the amount to be recouped, with the remainder being left to recover.

15. Of the amounts within payroll, approximately 39% are between $200 and $1000; approximately 36% are between $1000 and $5000; approximately 16% are between $5000 and $20,000 and approximately 4% ar.e above $20,000.

16. The number of cash payments being made to employees has reduced significantly over the past several pay periods, supporting a return to a "business. as usual" environment in regard to the number of no pays in any given pay cycle. Queensland Health has begun discussions with health unions to realign cash, cheque and EFT paytnents with normal payroll processing operations. It is planned that emergency cash payments outside the payroll system will be ceased in the near future.

17. Letters have been sent to all staff who are eligible for the $200 overpayment waiver. Staff who have paid the overpayment back to QH will be reimbursed and staff who owe the $200 will have it waived.

Hotline Calls

18. The number of calls being received by the payroll hotline has significantly reduced over the past six pay runs. In Pay Period 8 (30 June 2010), 2,506 calls were received in comparison to the past two pay periods, where the number of calls has been 661 and 639 respectively.

19. Call volumes have increased at the end of this pay fortnight compared to recent pay periods, largely due to staff enquiries regarding the $200 overpayment wmver.

Payroll Operating Model

20. Queensland Health has significantly progressed the Government's response to the implementation of the Auditor-General's report on the health payroll issues.

21. The new Payroll Operating Model has been significantly implemented with two payroll hubs (Townsville and Meadowbrook) fully operating under the new model providing services to the Townsville, Mount Isa and Metro South Districts. In all other hubs,. four out of the five core components have been implemented with the remaining component to be implemented before 31 December 2010. The following table outlines the progress of the implementation of the payroll operating model.

Payroll Staff Personalised · Local Aligned Agreed

New Payroll Operating Trained in Service Workflow Hub and Communication SAP and Model of Forms District and Governance


Cairns and Hinterland Health "' "' "' Dec 10 "' Service District Cape York Health Service "' "' "' Dec 10 "' District Central Queensland Health "' "' "' Dec 10 "' Service District Central West Health Service "' "' "' Dec 10 "' District Childrens Health Services "' "' "' Dec 10 "' Darling Downs - West "' "' "' Dec 10 "' Moreton Health Service . District Gold Coast Health Service "' "' "' "' "' District Mackay Health Service District "' "' "' "' "' Metro North Health Service "' "' "' Dec 10 "' District Metro South Health Service "' "' "' "' "' District Mt lsa Health Service District if "' if if. if

South West Health Service if if "' Dec 10 if

·District


New Payroll Operating Trained in Service Workflow Hub and Communication SAP and Model of Forms District and Governance


Sunshine Coast- Wide Bay .{ .{ .{ Dec 10 .{

Health Service District Torres Strait and Northern .{ .{ .{ Dec 10 .{

Peninsula Health Service District Townsville Health Service .{ .{ .{ .{ .{

District

22. Managers have been appointed to the two new hubs in Mackay and Gold Coast with approximately 40 staff within the hub on the Gold Coast located near the Gold Coast Hospital. This la:tter team still works closely with the Chermside payroll hub to ensure continuity and suppmi. In Mackay district, a payroll hub manager has been appointed (based in Mackay) and the hub is now operating with dedicated resources that are based in both Mackay and Rockhampton, pending finalisation of accommodation in Mackay. The personalised service model is operating directly between the Mackay district and the hub. The Mackay payroll work has now been separated from the Central and Central West district work which is occurring within the Rockhampton hub.

23. All districts have personalised access to their linked payroll hub to resolve payroll questions and issues. Contact can be made directly with the payroll hub or scheduled appointments can be made to resolve more complex issues.

24. 132 payroll staff across the state have had full training in SAP and a further 480 training events have been held for specific functions of SAP. 658 payroll staff have been fully trained in Workbrain. This will ensure that all forms can be processed by the district's linked payroll hub.

25. A web based payroll portal, to complement the existing fax server forms processing, is being trialled and will strengthen the personal link between the district and the payroll hub when it is implemented in the near future.

26. In line with our commitment to payroll staff, a job re-evaluation process is being undertaken across the state. The job re-evaluation process is developing new position descriptions in line with the new payroll model. These position descriptions will be evaluated and payroll staff remunerated accordingly.

27. Work to further improve the readability of payslips and enhance the roster output has begun. Extensive staff consultation will occur across the state over · the next three months.

Strengthen Queensland Health Corporate Services

28. The QH Corporate Services Division has been reorganised with two new Deputy Director-General positions (Finance, Procurement and Legal Services and Human Resource Services) recent advertising closing date of 25 October 2010. Applicant shortlisting is currently occurring.

29. An acting DDG Finance, Procurement and Legal Services has been appointed to the newly created division while recruitment occurs.

30. The. newly structured corporate services will strengthen Queensland Health's ability to deliver a more localised model of service in line with the national health reform agreement.

Ernst & Young Report- Best Payroll System

31. Ernst & Young were engaged to undertake a review of the Queensland Health payroll and rostering systems to:

o establish their ongoing suitability for Queensland Health; and

o ascertain what alternative solutions are available to potentially resolve the problems being experienced across the organisation.

32. The final Ernst & Young Report was received by the department on 30 September 2010 and a formal response will be released, following consideration by Cabinet, at the end November 2010 along with the report.

33. Queensland Health has briefed the health unions on the Ernst & Young report and is preparing a draft response for consideration.

34. The report recommends that the current QH payroll system improvement work, namely the Payroll Improvement Program continue, with a further program of work to being undertaken to optimise the existing solution environment (ie undertake an "optimise" project of the current systems to resolve all current issues and improve usability at the local level). This recommendation was identified by Ernst & Young as the most effective and efficient with lowest risk to the organisation.

35. Discussions are currently occurring with Ernst & Young to request them to draw a distinction between those matters recommended as being necessary to ensure the system is suitable for purpose and those recommendations which would optimise the system, but may not necessarily improve the system.

36. These discussions will include separating the recommendations into phases of work in order to identify the program of work and associated time:frames involved in providing the modifications required to deliver a sound operational system suitable for purpose, versus balancing these requirements against providing a 'best practice' or 'optimised' system. For example, phase 1 may include re-architecture of the system to manage leave, reconfiguring of system to separate into groupings of up to say 15,000 employees and phase 2 may include introduction of employee self service (ESS) or manager self service (MSS).

Appendix 1 Payroll Hotline Information

• The payroll hotline shows a significant reduction in the number of calls received. The reduction in the number of calls received each fortnight coincides with the commencement of the Payroll Improvement Program.

Appendix 2 Emergency Cash Payments

• The number of interim payments made to staff demonstrates ongoing improvement. The first chart shows the status of all interim payments since 24 March 2010, after the go-live of the new payroll system.

-0.

" ~ tOo ~~c~~,-:.FF-:11'7-' " z

Interim Payments 24 March 2010 to 8 October 2010

Payment Date

Pay Day -cash -CHQ · · EFT ~·-~·-Grand Total!

• The second chart depicts in more detail the status of interim payments since the end of July 2010. The ongoing reduction in cash payments is providing Queensland Health with an opportunity to ensure appropriate controls are in place to prevent fraud.

Interim Payments 31 July 2010 to 8 October 2010

"' ~ 100~~~~~~,~~~~~~~~fi~~~~~~·~~~~~~~~~~~~~~ " z

Payment Date

j.:c .· Pay Day Cash CHQ •• ·EFT -Grand Total!

Documents

· 2012-10-31 · Fortnightly Progress R~port Three - Implementation of Government's response to the Auditor-General's report on the Queensland Health payroll issues MINISTER Deputy