Federal government using AI to tackle Phoenix backlog as it tests replacement system

Alex Benay, Associate Deputy Minister at Public Services and Procurement Canada, speaks during a news conference at the National Press Theatre in Ottawa, on Tuesday, July 9, 2024. THE CANADIAN PRESS/Justin Tang

OTTAWA — The federal government is expanding its use of artificial intelligence to clear a backlog of Phoenix pay system transactions as it transitions to a new platform.

Alex Benay, associate deputy minister at Public Services and Procurement Canada, says his team will be able to share a recommendation with the government on whether it should adopt the Dayforce system as its new human resources and payroll platform by the end of March.

Until then, the government is working to tackle a significant backlog of transactions, including with the help of a virtual assistant tool that uses AI to help fix data discrepancies in pay and compensation services.

That tool has been in testing over the last few months, says Benay, and with the help of 30 compensation advisors, has processed over 4,300 backlog transactions.

Since 2017, the government has spent at least $3.5 billion on the Phoenix pay system.

Given its ongoing problems, the government has also spent more than $150 million looking into a new platform to replace it.

Benay says AI is automating repetitive tasks, speeding up decision making and providing insights into human resources and pay data.

He says the government is testing the use of its AI assistant tool for three types of transactions — acting appointments, leave without pay and executive acting appointments — and is planning to launch automated “bulk processing” in these areas in April.

The government plans to expand AI-use to more transaction types over the course of next year, according to Benay, and could eventually use it to help with all types of cases, like departmental transfers and retirements.

There will always be an aspect of human verification, Benay says, as the tool was developed to keep humans in the loop.

“One thing we will not do is just turn it over to the AI machine,” says Benay.

The Government of Canada website says the backlog of transactions stood at 383,000 as of Dec. 31, 2024, with 52 per cent of those over a year old.

The government has said that it doesn’t want any backlog older than a year being transferred into a new system.

“A human only learns so fast, and the intake is continuing to come in,” Benay says. “The reason the AI work that we’re doing is so crucial is we have to increase (the) pace.”

Benay says the government has launched two boards that will oversee the use of AI and is looking at a third-party review of the AI virtual assistant tool over the course of the winter, with results to be published once it’s completed.

“The AI virtual assistant tool is going to help us dramatically increase the amount of automated processing we can do in the new year,” Benay said, adding that the government has been using robot process automation for years, but is now “evolving” to AI.

If Dayforce gets the greenlight, Benay says it will then take 18 to 20 months of configuration and testing before the government can launch the system, with the current and new systems likely to run in parallel for four to six months.

This report by The Canadian Press was first published Jan. 23, 2025.

Catherine Morrison, The Canadian Press