The Government yesterday announced the controversial Novopay school payroll system will come under its management from October this year.

It was a move welcomed by Wanganui High School principal Garry Olver - although he had doubts about the same software still being used.

"We can only welcome the change and hope that the Alesco software will work better than it has been.

"In the two years I've been at the school, we have never had a pay schedule where all the staff have been paid correctly."

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With a staff of 160, Mr Olver said it had caused a lot of stress because the Ministry of Education had put the onus back on schools to sort out mistakes.

"In the last pay schedule, a staff member who retired last year was paid - that takes time for someone to sort out and plays havoc with accounting.

"Sometimes you are too scared to query mistakes about leave entitlements because it may lead to even more confusion.

"The payslips read as if you have left your job and been re-hired between pay schedules - it has been very unsatisfactory."

The ministry has negotiated with Talent2 - the company providing the Novopay payroll service - to pay the ministry between $18 million and $22 million, made up of $7 million in cash and other considerations, including a licence for the Alesco software and discounted fees for the support and maintenance of the software.

"This decision has been made in the best interests of all parties: staff, administrators, schools, and the Government," Minister of Economic Development Steven Joyce said yesterday.

"We'll also be simplifying the school payroll.

"The current system requires two thirds of all teaching and non-teaching support staff have their details changed every year.

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"This sort of complexity has caused problems for not one but two pay systems over the past decade and it's not sustainable," Mr Joyce said.

Wanganui City College deputy principal Doug Ewing said the college's Novopay problems had not been as bad as the High School's because its staff was smaller, although it still had its share of problems.

"The previous system with Datacom worked flawlessly and there was a person we could contact who would sort problems out quickly and efficiently.

"The ministry led us to believe the system was about to fall over and a new one was needed but it seems to me that with the introduction of Novopay, they threw out all the institutional knowledge.

"Katie, who worked for Datacom was familiar with the names of school staff whereas Novopay operated by email and internet contact.

"When we were unable to get a response to queries, we would have to call the ministry and they would contact Novopay and ask them to contact us.

"We are still chasing payments for historical mistakes."

The New Zealand Principals Federation welcomed the change, saying it would lead to greater accountability.

NZPF president Philip Harding says the federation would like to see the money paid by Talent2 reinvested in schools to alleviate the extra costs that they incur and will continue to incur into the future.

'The announcement does not cure the Novopay shambles that the sector has been battling for the last three years,' he said.