A ministerial inquiry into the error-ridden Novopay system is set to cost the Government a further $500,000, on top of extra expenditure to fix problems with the system.
The minister responsible for the payroll system, Steven Joyce, today announced further details of the inquiry, which will be led by former Department of Prime Minister and Cabinet head Sir Maarten Wevers and Deloitte chairman Murray Jack.
The education sector will be consulted over the review's terms of reference this week, and its estimated $500,000 cost will come from the Ministry of Education's budget.
The inquiry will look at all aspects of Novopay dating back to 2005, when Talent2 was awarded the contract for the system, and will take into account a technical review, due to be completed within the next month.
Mr Joyce says following the inquiry, he will ask the Ministry of Business, Innovation and Employment, Treasury, State Services Commission and the Government's chief information officer to provide cabinet with advice about contracting arrangements in the wider state sector.
Mr Joyce last week announced the inquiry and technical review alongside a raft of measures to address issues with Novopay, including a remediation plan to fast-track software stabilisation.
The Government is also looking at contingency plans like reverting to the previous Datacom payroll system, if Novopay can't be repaired.
Despite the new measures, Mr Joyce warned the issues are complex and will take time to resolve.
Mr Joyce said the measures could cost millions of dollars.
The Government will put up the money initially and negotiate later with Talent2 about who pays for what.
Since Novopay was rolled out in August thousands of teachers have been overpaid, underpaid or not paid at all.
The Ministry of Education says it may take another 18-24 months for the system to be fixed.
Official documents released on Friday show the Ministry of Education had serious concerns about Novopay two months before three ministers signed it off last June - but still recommended the go-ahead.
Ministers knew 147 errors had shown up in test runs but they were told none of the problems were serious and they could be fixed.