Glen McGregor, host: I’m outside the new federal pay centre, and it’s a beautiful building. It’s about three stories high.

McGregor: Back in the fall, I took a road trip.

McGregor: Grey slate tile. Looks to be several hundred square metres of footprint. The parking lot, though, is less than half full. It’s a Tuesday morning.

McGregor: To understand the Phoenix rollout — and how it all went so wrong — I had to go to the town at the centre of it.

McGregor: I haven’t seen a single person. I saw a couple of people out having a cigarette behind the building, but that’s about it. The front door was all locked and you can’t get in without a swipe card, so I’m not going to be able to go in.

McGregor: The decision to centralize pay services here is at the heart of the Phoenix story. The government relocated hundreds of compensation advisor positions from departments across the country to Miramichi, this small community in New Brunswick, which is one of four coastal provinces that make up the region called Atlantic Canada. The building opened in 2018, after the launch of Phoenix, but the move to Miramichi began years earlier.

As we discussed last episode, before the move, public service managers and workers were largely in agreement on a key point: the process of paying about 290,000 employees wasn’t working very well. Payroll in the Canadian government was kind of a patchwork of different systems in different departments, running on outdated software in desperate need of a refresh. The solution that the Conservative government came up with was to centralize many of the pay services that were spread out across the country into one unit in one location, and to automate as much payroll work as possible. That location was to be Miramichi. That decision promised to revitalize a small community struggling from decades of industrial decline. But it also made Miramichi synonymous with a huge administrative debacle.

I’m Glen McGregor. I’ve been an investigative reporter in Ottawa for more than 25 years. This is Phoenixed: Inside Canada’s payroll disaster, produced by the Global Payroll Association and Storythings.

Adam Lordon: Should we be effectively folding in the tent here and accepting this trajectory as a dying community? Or can we maybe be something else?

James Bagnall: Whoever was in power wanted to basically play to the political base in New Brunswick.

Alain St-Arnaud: The first year was really a, a big mess.

McGregor: Episode 2, “Moving to Miramichi.” Miramichi is about a two-hour drive from New Brunwick’s capital city of Fredericton. It was formed through an amalgamation of two smaller towns — Newcastle and Chatham — and several other communities. The city’s total population is only about 17,000 people, and until recently, that figure had been falling.

The day I visited, there were ice chunks whipping quickly along the Miramichi River under an old railway bridge. The stretch of Water Street in what was formerly Chatham is the closest thing Miramichi has to a main street. I saw a barbershop, a florist, a dollar store, even a small art gallery — and a few empty storefronts. After my visit to the new pay centre building on a blustery winter morning last year, I did what almost everyone in Canada does when they want to warm up: I went to the nearest Tim Hortons. It’s a chain of donut and coffee shops, named for a famed Toronto Maple Leafs hockey player. Canadians are enormously proud of their Tims, and you’ll find one in pretty much any community with more than a few thousand people. And inside, most often, you’ll see groups of older folks debating matters of civic import as they sip cheap coffee. I met a few people like this in a Tims in Miramichi, near the pay centre.

McGregor: Excuse me, gentlemen. Have you guys been around a while?

Unidentified person #1: Here?

Unidentified person #2: We’ve been here about 85 years.

McGregor: 85 years?

Unidentified person #3: 84.

McGregor: Oh, really? What’s your name?

Ken Quinn: Ken Quinn.

McGregor: Ken Quinn, okay.

McGregor: Ken is a retired car salesman who spent his entire life in Miramichi. He and his buddies come to Tims most days, on what they call their 11 a.m. shift.

Quinn: That’s the best thing that ever happened to this town, that payroll.

McGregor: Why do you say that?

Quinn: Well, there’s 7 or 8 hundred people working there.

McGregor: Yeah.

Quinn: And making good money.

McGregor: Ken’s son, it turns out, is among those who work at the pay centre. He’s been there for about two years.

McGregor: A lot of, a lot of folks have left before it arrived. There was a lot of folks who were leaving, going to central Ontario, or southern Canada or west, right?

Quinn: Alberta. I have a daughter, moved to Fort McMurray. She's a teacher. She was at the community college here and her job was eliminated. So she found the internet and found a job in Fort Mac, and out she went.

McGregor: Right.

McGregor: Ken had certainly heard the controversy over Phoenix that made his community the focus of some unflattering news coverage. But it passed, and the pay centre where his son works is still here.

McGregor: Well, it must be satisfying if you’ve been here all your life to see the town go through some difficulties and then sort of turn around a bit, eh?

Quinn: Yeah.

McGregor: Yeah.

Quinn: I don’t think it’s ever been as good. Never been any better right now.

McGregor: So, bringing payroll to Miramichi was good for the community — but what about the hundreds of compensation advisors who were given an ultimatum: relocate to New Brunswick or risk losing their jobs?

St-Arnaud: My name is Alain St-Arnaud, and I was working as a compensation advisor in Miramichi between 2012 and 2016. And before that, as a compensation advisor for Veterans Affairs from 1998 to 2012.

McGregor: Alain St-Arnaud was building a career in the department of veterans affairs, which looks after former military members. He worked in a veterans hospital in the Montreal suburb of Sainte-Anne-de-Bellevue, making sure orderlies and nurses were paid properly.

St-Arnaud: They were shift workers, so they had to work on weekends, sometimes on the weekdays, sometimes at night. We had, at a time, between 150 and 175 employees that we were responsible for. With, fine, we would know, okay, this guy or this woman is taking leave with income averaging every year during that period of time in the summers. So we were used to their habits.

McGregor: Like many compensation advisors, St-Arnaud developed a local expertise in making sure pay requests were entered correctly into the existing computer system, which ran on the FORTRAN programming language and required a wizard-like command of numerical codes.

St-Arnaud: So you have a book where you have all the scenarios, and then you have to fill this field with that code.

McGregor: The pay system at Veterans was quirky, not intuitive. Each pay event — overtime, maternity leave, a promotion — had to be entered into the system with the right numerical code for the right area of the country.

St-Arnaud: If the employee was working in the province of Quebec, the code for Quebec was 24. For Ontario, it was 30, if I recall right. And so there were different codes from 1 to 5 digits for something else.

McGregor: All old hat for a veteran like St-Arnaud, but to teach it to someone new — well, that was harder. Alain was enjoying the work, but then he got an offer to move.

McGregor: And tell me about the decision personally for you, and I guess other people who work in compensation, to move to Miramichi, because it may not be a place everybody wants to go.

St-Arnaud: I really liked working in the pay environment and we knew that they were getting rid of all the compensation advisors from all the department at that time. And it was early in my career and it was really a field in which I was really interested to continue working in. So that’s why I decided to move there.

McGregor: Alain says managers in the department responsible for payroll — now called Public Services and Procurement Canada — assured him that it would be a good fit for a French speaker like him because New Brunswick is a bilingual province.

St-Arnaud: I was coming from a French environment, that Miramichi was also almost as French as English, but it was not the case. They were mostly English-speaking people over there. But it was a great opportunity to improve my English though …

McGregor: Mhm.

St-Arnaud: But I was used to go to movies, theatre, opera in French and there was not much there, because it was really a tiny city.

McGregor: Indeed, while New Brunswick is officially bilingual, less than 20 percent of the population in Miramichi speaks French. And Alain is being diplomatic about the size of the community. For someone coming from a place like Montreal, with a vibrant arts and cultural life and Grand Prix and festivals, relocating to remote New Brunswick would be a shock. To many, it seemed like an odd decision to move workers like Alain there. The core of the federal public service is in the National Capital Region of Ottawa-Gatineau. The other major clusters are in larger cities like Toronto, Montreal and Vancouver. So why here? Why Miramichi? Well, first, some local history. Pulp and paper mills were once a dominant employer for towns along the Miramichi River. But as the industry began to dry up and unemployment rose, many young

people began to leave, searching for better opportunities in bigger cities or the oil sands in northern Alberta. Among those looking for greener pastures was a young man who left Miramichi to work in the entertainment industry but later returned, ending up in a very different kind of job.

Lordon: So I’m Adam Lordon. I’ve been the mayor of the City of Miramichi since 2016. I was first elected as a city councillor in 2015. Grew up here, born and raised. Then I went to university in Halifax and spent almost a decade living in Toronto, where I began my professional career as a media and television director, producer, writer.

McGregor: I came to meet the mayor at Miramichi’s city hall. It’s a small office building located on an open square, ringed by mom-and-pop shops: the County Cobbler and the Opry Music Store. Oh, and there’s also another Tim Hortons around the corner. One of the first things I wanted to ask him: was I saying it right?

McGregor: It occurs to me that your city’s name is mispronounced a lot. I’ve heard a lot of people say it wrong, and I’m wondering, do you have a list of the way people say it incorrectly that you remember?

Lordon: Ha, you know, people do say it quite incorrectly quite a lot. Miramichi (meer-uh-muh-shee) is an Indigenous name, you know, so I don’t know if there — people have trouble pronouncing it: mare-uh-mat-chee, mare-uh-mee-chee.

Unidentified person #4 [in a TikTok video]: Meer-uh-mee-chee.

Unidentified person #5 [in a YouTube video]: Meer-uh-mit-chee.

Unidentified person #6 [in a YouTube video]: Mare-ah-mee-chee.

Lordon: There’s lots of different incorrect ways, but we politely correct them. And hopefully, eventually, most people get there.

McGregor: The announcer on the Toronto Raptors game a couple years ago mispronounced it and then got flooded with calls, or tweets, at him. And he apologized later in the, in the same broadcast. Matt Devlin [in an NBA broadcast]: Gasol, a corner 3, from meer-uh-mat-chee!

Leo Rautins [in an NBA broadcast]: Where?

Devlin [in an NBA broadcast]: Meer-uh-mah-shee.

Rautins [in an NBA broadcast]: Mah-shee?

Devlin [in an NBA broadcast]: New Brunswick.

Rautins [in an NBA broadcast]: Okay, all right, okay.

Lordon: That was a big deal down here. And I gotta tell you, like, then we got mentioned twice. So that was — we’re passionate about a lot of things down this way, including making sure we’re recognized correctly.

McGregor: Right, right.

McGregor: Since he became mayor, Lordon has produced and acted in a television series called Brit Out of Water. It’s about a comedian who gets cancelled for calling those who supported the U.K. leaving Europe “racist morons.” He decides to make his own Brexit and move his family to New Brunswick.

[Soundbite of a trailer of TV show Brit Out of Water] Katherine Cairns: (As Sam Mullinger) You’re just diving into our new life with both feet.

James Mullinger: (As himself) Guilty as charged!

Mullinger: 50 chickens stolen.

Actor #1: You want a bag for your hodgepodge?

Actor #2: This town already has a hilarious crew of comics.

Actor #3: Why don’t you come down to the open mic sometime, huh? I dare ya!

Mullinger: (As himself) I can’t see how I’m possibly going to regret any of this.

McGregor: The show pokes gentle fun at the fictional town of Riversville that’s pretty clearly modelled on Miramichi and Lordon’s experience living in a place that struggled for so long.

Lordon: So, growing up in the ‘80s and the ‘90s, our primary industry was actually, really, like mills, pulp and paper mills. So we had several mills in the city and in the region that were the backbone of the economy, no question. Of course, in the ‘80s and into the ‘90s, we also had a Canadian Forces base. So CFB Chatham was a significant part of the local economy, and that closed down in the mid-‘90s. And between that closing down in the ‘90s, and really from that point on into the mid- to late 2000s or aughts, most of the mills around the region closed as well. So for many of the 2000 years, really, we were a community in economic decline, with a lot of challenges and not really knowing what that new economic base might be.

McGregor: But in 1989, a tragic event — not in New Brunswick, but in Montreal, Quebec — would reverberate all the way to Miramichi.

[Soundbite of CBC News’s TV program The National]

Unidentified person #7: Évacuez à droite, s'il vous plaît.

Paul Workman: There was utter pandemonium outside the university building as ambulances carted away the injured. Police have now confirmed: 14 students dead, all women.

McGregor: Canadians refer to the shooting as the Montreal Massacre. On Dec. 6, 1989, a lone gunman carrying a hunting rifle burst into a classroom at École Polytechnique. That’s an engineering university in Montreal. The gunman told the men to leave. He reportedly shouted “I hate feminists” at the women and began shooting them. He killed 14 young women before he turned the gun on himself. The massacre left a profound and lasting scar on the Canadian psyche, and it also renewed the debate in Canada about gun control. After the next election, the new Liberal government created something called the long-gun registry. It was a giant database of every firearm in Canada: handguns, shotguns, hunting rifles, all had to be registered. The government chose to establish a centralized processing site for the long-gun registry in Miramichi, New Brunswick. Now, it didn’t create a huge number of jobs, but for an area whose population was ebbing, it was a small win. The long-gun registry also proved to be politically controversial, because it required the registration of non-restricted firearms, meaning most common rifles and shotguns. Farmers, hunters, sports shooters — none of them liked it, and the costs of setting it up grew to nearly $2 billion. Stephen Harper opposed the long-gun registry, and when he came to power, he made good on his promise to scrap it. But the registry was left running with a smaller mandate, and most of the jobs with it stayed in Miramichi.

Lordon: The gun registry has traditionally been between 150 and 250 full-time jobs, and they're still at about 150 right now, and a big part of the local community for sure. But certainly, from a scale perspective, that was really a drop in the bucket when you're talking about replacing a military base and several mills.

McGregor: Then, more good news for the community came when the Harper government decided Miramichi would be the home of the new payroll centre.

Lordon: I think it was, from my perspective, everything. That was absolutely the foundation of everything we've seen since then. After the mills were closing, there was a lot of drifting in the community, and with — combining that, and the context of an aging and declining population, you know, there was certainly dark times in the community. Like even when I came into council in 2015, 2016, you're having conversations about like, you know, should we be effectively folding in the tent here and accepting this trajectory as a dying community? Or can we maybe be something else?

McGregor: Lordon says the payroll centre put Miramichi on the second path.

Lordon: As a community, we feel like we've been given this new beginning and this new opportunity. You know, even in the last few years since COVID, it feels like an entirely different context. So economically, the pay centre has created a new foundation, and from that, we've been able to really flourish. Population-wise, we were declining from the time we became a city in 1995, up until about 2020. So around 2020, it's flipped and we're growing again as a community, which is fantastic. We're attracting record numbers of newcomers and immigrants internationally, and they've really helped to fuel this renewal and increased diversity in the community too.

McGregor: So, a lot of changes for the region in a short time. But Miramichi’s gain was a loss for other communities. When the centralization process began in 2012, there were about 2,000 compensation advisors working in more than 100 government departments and agencies all scattered across the country. Over four years, about 1,200 of those positions were eliminated, but 460 pay advisor positions were created in Miramichi. So, the benefits to the community were clear, but for the government, there were other factors at play. I spoke to a veteran Ottawa journalist who covered the federal public service and the overhaul of the payroll system.

Bagnall: My name is James Bagnall, former associate business editor at the Ottawa Citizen where I worked for pretty close to three decades. I retired from there in 2022 and have since written a book.

McGregor: Not about Phoenix.

Bagnall: A chapter in there.

McGregor: Is there?

Bagnall: Yeah, oh yeah.

McGregor: Okay.

McGregor: Jim Bagnall’s theory: that the government was inspired to move payroll to Miramichi because of its prior experience relocating a key service to a slumping rural region. That is, the centralizing of the government pension services in a place called Shediac, New Brunswick, about 120 kilometres from Miramichi.

Bagnall: Basically, with the pension system, it's one system across the country. And with the pay system, you had an extraordinary number of rules and regulations and they vary by department. So it was a much-different beast. But of course, the lessons that the public services department took from their successful implementation of the pension system was that, “Hey, we can do this.” The formula was you automate the systems, you cut staff and they put a unit in Shediac, New Brunswick to handle all the, all the pension requests. And that actually worked very well. But there were a couple of things that — lessons that they took — that were just incorrect. First of all, with the pension system, they spent enough time to train all these people. And when you start to look at the assumptions built into the development of the payroll system, they were basically looking to book savings before anything had happened. And they really shortened up the amount of time they've spent training people. And in fact, they started laying people off before they were sure that the system was going to work. These are the old administrators that they were laying off and then hiring new ones in New Brunswick later.

McGregor: There were political considerations too. Historically, New Brunswick has swung back and forth between Canada’s two main political parties, the Liberals and Conservatives.

Bagnall: So whoever was in power wanted to basically play to the political base in New Brunswick, which is relatively important in Maritime terms. But it also satisfied the government's plan to decentralize some of the operations out of Ottawa, which has, as you know, about 40% of all public servants in one town. And so there was an imperative to get these people out into other parts of the country.

McGregor: Now, some compensation advisors did take the offer and move to New Brunswick, including Alain St-Arnaud.

St-Arnaud: I was there from the get-go, from the first day. And we implemented some training for the — because we were, I think we were probably between 10 and 12 only seasoned compensation advisors that moved to the pay centre. All the others, I think the first week, they were 100, 105 new employees that were hired at that time and we were training them on compensation. It was over 18 months to get them to — from new hires to change in salary to termination. So all the compensation transactions that you should be able to handle as a compensation advisor.

McGregor: At this time, St-Arnaud wasn’t working directly on Phoenix, but was brought in as instructor, tutoring new compensation advisors hired to work in Miramichi on the fundamentals of payroll. One of the issues they dealt with was the large number of workers affected by government cost-cutting measures, who had been W-F-A’d, workforce adjusted: moved out of their jobs, some to new positions, others let go.

St-Arnaud: This is not something that is happening quite often in the compensation advisor career …

McGregor: Mhm.

St-Arnaud: They were brand new employees with transactions that for a lot of people that were — even me, I was not used to WFA transaction at all, because this is not happening quite often. So we had to deal with that almost at the same time when the pay centre opened. So we were getting a lot of transaction. For those type of transactions, it involves a lot of calculation that must be done manually. And the system is not — even the old one was not working to do that, we had to do the calculations manually and input the, the amounts in the pay system. So the first, the first year was quite a challenge because of that, because of all the WFA people and all the transactions that were coming as well.

McGregor: Back in his old office in Sainte-Anne-de-Bellevue, St-Arnaud was used to working with the pay files for a limited number of employees. He was responsible for them and knew all the particular rules about overtime and time off that might apply. But in Miramichi, the government was taking a different approach.

St-Arnaud: You would get a case that you would process without even looking at what happened in the past or what will happen in the future. You were just concentrating your focus on that transaction. But if there were transaction in the employee’s file that were not addressed yet, they may have an impact on the one you’re working now. But they are not looking at what may have happened or what will happen with that transaction. They are only focusing on that one.

McGregor: The outcome of that decision had a major impact on so many, including the people here in Miramichi, who were blamed by some for making a hash of government payroll. Here’s the mayor.

Lordon: I remember actually having to defend the community against union representatives, which was an odd thing upon reflection — like, I'm not sure, like, you know, how did the workers feel that their own union representatives in Ottawa were suggesting that they weren't up to the task? But of course, we emphatically knew that that wasn't true, and I emphatically defended the people of Miramichi against some of those naysayers. The challenges with the rollout had to do with how everything was, you know, organized, and then the challenges of the software — had nothing to do with the people in Miramichi who are as capable as they are everywhere else.

McGregor: So while St-Arnaud and his colleagues were struggling to keep the old system going, they began hearing about progress on Phoenix.

St-Arnaud: So we're kind of a bit skeptical …

McGregor: Hm.

St-Arnaud: Are you sure that it's going to work well? The rumours we were getting at the pay centre is that the system was not working as it was supposed to. And in fact, it also happened that when we went live with the system, that some transaction that the system was supposed to do, didn't do, and what it was not supposed to do, did. So the first, the first year was really a, a big mess.

McGregor: A really big mess. And one that was going to get even messier. By early 2016, the government had mostly completed the centralization of its compensation workers in New Brunswick — a key step in its transformation of pay initiative. The next step is launching Phoenix. Although some in Miramichi were worried and some tried to give warnings, the federal government pressed ahead with what would become a major administrative disaster. That’s next time.

• Government of Canada: Transformation of Pay Administration Initiative: FAQs
• City of Miramichi: Official Website
• University of Alberta: Miramichi Community Report: A media analysis of events associated with forest industry mill closures
• Matt Devlin on X (formerly Twitter): Apology for mispronouncing ‘Miramichi’
• The Canadian Encyclopedia: École Polytechnique Tragedy (Montreal Massacre)
• Royal Canadian Mounted Police: History of firearms in Canada
• Government of Canada: Transforming pension administration
• Global News: Tense day for civil service as departments begin post-budget job cuts
• CBC: Miramichi mayor wants apology for payroll centre comments
• Miramichi Online on Facebook (video): Matt Devlin mispronounces ‘Miramichi’
• Brit Out of Water (video): Full Movie
• CBC (video): The Montreal Massacre, 1989