A Government takeover of the troublesome Novopay teachers' pay system is a "wise decision", says a Northland principal.

On Wednesday, Cabinet Minister Steven Joyce announced a Government-owned company would take over management of the Novopay system from Australian company Talent2 from October this year.

Northland schools have struck countless problems with the system since it was introduced in 2012, including overpayment and underpayment of wages as well as missed wages, with school staff working long hours to try to correct the problems.

Tai Tokerau Principals' Association president Pat Newman, of Hora Hora School, said the Government takeover was a positive move.


"I look forward to the day when Novopay is a bad dream. I think it's a wise decision because if it's come under the Crown there should be some understanding of the school culture in the way of how people get paid," Mr Newman said.

He said payroll was still a three-day a week job for someone in his office, whereas before Novopay, it used to be a couple of hours a week.

"It's the constant checking to ensure things are right."

Talent2 will pay the Ministry of Education between $18 million and $22 million including $7m cash and other considerations such as licence to use the core software by way of a settlement.

Mr Joyce said although the system had been improving, recent contractual issues involving Talent2 not being prepared to further resource the system led to the management takeover.

Reaction from the education sector has been mixed.

New Zealand Principals' Federation president Phil Harding said while placing Novopay under Government management would bring greater accountability to the public, its announcement did not cure the Novopay "shambles".

"The same challenges of random errors, frustratingly slow problem resolution, inaccurate personnel data, and significantly increased workload will continue," he said.

"Success will be determined by the way the new entity is managed and, more importantly, resourced to deal to these priorities."

The federation wanted to see the money from Talent2 reinvested in schools to alleviate extra costs they had incurred and would continue to incur into the future.

New Zealand Educational Institute national secretary Paul Goulter echoed this call for compensation and said the Government should have taken over Novopay at least a year ago.

"Government has dragged its feet for two years while the problems with Novopay wreaked havoc in our schools.

"Our schools and the staff directly affected continue to pay the price," he said.