Minutes of a meeting of the Board of the Accident Compensation Corporation held via
videoconference on Thursday, 24 January 2019 at 1.30 pm.

Present
Dame Paula Rebstock
Chair

Mr Trevor Janes
Deputy Chair

Ms Anita Mazzoleni
Member

Mr James Mil er
Member

Ms Kristy McDonald QC
Member

Mr David May
Member

Ms Leona Murphy
Member

In attendance
Mr Scott Pickering
Chief Executive

Mr Mike Tully
Chief Operating Officer

Mr Peter Fletcher
Chief Technology & Transformation Officer

Ms Deborah Roche
Chief Governance Officer

Mr Herwig Raubal
Chief Actuarial and Risk Officer

Mr John Healy
Chief Financial Officer

Ms Emma Powell
Chief Customer Officer

Ms Gabrielle O’Connor
Head of Client Service Delivery

9(2)(a)

Manager Corporate Secretariat

9(2)(a)
  General Counsel and Company Secretary

9(2)(a)

Senior Associate Company Secretary

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  Procedural Business
Apologies
There were no apologies.
  Board Only Session
  Operational Reporting
Operational and Financial Performance Report
(a)
ICIP Reporting
Mr Fletcher summarised the report, focusing on the following points:
•  The past month had been positive for ICIP.
•  Since December 2018, the first full test of the new Analytics platform had been completed
successfully, and 2019 had begun with a successful sprint. On 25 January 2019, Eos data
would start being loaded into the system at scale, and, provided the scale test was successful
over the following ten days, Analytics could turn from amber to green.
•  The Eos 8.8 upgrade was on track to go live as planned on 11 March 2019. Rehearsals would
start in the next week for deployment. In response to a Board query, Mr Fletcher explained that
it would occur regardless of progress on Analytics, because the remediation work was all on
track.
•  Client Payments had successful y completed its first performance test. Go-live was scheduled
for 6 May 2019, and both Eos 8.8 and Client Payments were tracking to budget.
•  For Next Generation Case Management (Next Gen), the team had been asked to provide
options that significantly lowered the risk profile while creating certainty for staff, accelerated
implementation and allowed ACC to deploy and learn, and also to focus on the experience of
ACC’s clients and staff. Mr Fletcher was supportive of the proposed option that the Board would
consider later in the meeting.
•  The Health Services Strategy work continued to progress and Management was looking at
ways to accelerate its delivery.
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•  Good progress was being made in setting up the organisation for agile, continuous delivery on
the back of the major ICIP platform deliveries, and, from February 2019, Management would
look to report progress on this work. Nothing had happened in the past month that gave rise to
any concerns about the overall $669 mil ion envelope of the ICIP.
In response to a Board query regarding what would trigger a concern for the overall ICIP envelope,
Mr Fletcher explained that Eos 8.8 and Client Payments 1 were due to come in on budget, without
use of contingency. The overall amount of contingency in proportion to what was left was therefore
increasing. Mr Fletcher was confident that despite needing more for Next Gen, there was plenty of
headroom and ICIP as a whole would stil  come in on budget. In response to a further query,
Mr Fletcher explained that Next Gen would not use the rest of the contingency.
In response to a Board query regarding whether all the technical issues had been overcome for
Analytics, Mr Fletcher explained that Analytics was very close now. It had been proved that the
platform worked. The next test would be to put data through at scale. While Mr Fletcher was
confident, it needed to be tested to provide certainty. There would be lessons learned on
performance that would result in some tweaks. The outcome would be known in the next ten days.
RESOLVED: The ACC Board resolved to:
Note the verbal update on the ICIP.
(b)
Second Quarter Report
Mr Healy summarised the key points of the Second Quarter Report:
•  Injury prevention showed amber on two key measures: serious injury and return on investment.
•  On rehabilitation performance, Mr Healy had continued to show the volumes. There had been a
40% increase in the number of clients. The return to work measures would likely remain red for
the full year.
•  Overall solvency had dropped to 90.7%, and may drop further by year end. This was mainly
driven by lower than budgeted investment returns. Also, the growth in the OCL was mainly
driven by the reduction in the discount rate, which had an impact of $3.4 bil ion.
•  Net Trust Scores remained at amber. It was difficult to predict what would happen in the third
and fourth quarters, and there were actions in place.
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•  The drop in motor vehicle account volumes that had been shown last month had occurred due
to the automated lodgement system not picking up certain information from the forms. This had
resulted in lower reporting on motor vehicle lodgements. An estimated adjustment was made,
and the wording in the Quarterly Report would need to be changed, as it currently incorrectly
stated that there had been “a material reduction in the number of claims registered into the
Motor Vehicle Account”.
In response to a Board query regarding the obligations on the Board to report on measures that
were off target, Mr Healy advised that he would ensure it was reported systematically.
Management usually discussed the red measures with Treasury to determine where to provide
more detail.
In response to a Board query regarding the increase in weekly compensation claims from trades
and plant or machinery workers, and the actions being taken in response—and also to the
increase in physiotherapy costs—Mr Healy explained that Management was working on
understanding the trends. He would report to the Board on those in more detail. The Board asked
that the Quarterly Report show ACC’s response to the rise in these two areas.
The Board discussed Lime scooters and whether it would be possible to charge these new modes
of transportation. It was important to look at allocating costs to the entity that had control over the
transport mode. When considering the future of mobility, Lime scooters provided a test case for
ACC because there could be a bigger move toward shared transport. Although cyclists were also
involved in accidents, there was no ability to levy personal bicycles, unlike for Lime scooters that
were rented out. ACC would need to be proactive about charging for these new transport modes
and getting injury prevention across them.
The Board discussed the total solvency ratio being reported on when it was the solvency of the
individual Accounts that mattered, and noted that treatment injury had improved against the
budget. Mr Raubal explained that the treatment injury improvement was a financial adjustment
when Taylor Fry did the recalibration.
Regarding reviews, the Board noted that FairWay seemed to be doing very well now. The Board
asked Management to arrange to invite the team responsible for turning review performance
around to join the Board for lunch at the March 2019 Board meeting to thank them. Workers’
compensation, however, seemed to be getting worse. More work needed to be completed on this.
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ACTION: Management to work with other agencies on new, unregulated transport methods and
what could be done to ensure ACC’s injury prevention and levy collection activities reached the
new technologies.
RESOLVED: The ACC Board resolved to:
(a)
Approve, subject to the agreed changes, the presentation of the second quarterly report
2018/19 to the Minister by 31 January 2019.
(b)
Approve the publication of the second quarterly report 2018/19 on ACC’s external website
following acceptance of the report by the Minister for ACC.
(c)
Note the additional performance information for December 2018 (Appendix 2).
  Board Papers
Next Generation Case Management Rollout Update
The Deputy Chair took over chairing the meeting during Mr Tully’s oral presentation, as the Board
Chair had to temporarily leave the meeting. Mr Tully summarised Next Gen’s progress to date,
covering the following:
•  Challenges had arisen for Next Gen, which had led Management to this re-presentation of
the approach to rollout since the Board had considered it at the August 2018 Board
meeting.
•  At this Board meeting, Management was seeking from the Board consideration of the two
options proposed: one was rollout with the full technology. This option would have
technology deployment in November 2019 and the first Tranche commencing in January
2020. The second option was rollout with partial technology. It would deliver some
technology in August 2019, with the first Tranche prior to Christmas 2019.
•  Management was recommending the second option for Board approval.
•  Both options had pros and cons, but option 2 had implementation advantages.
•  There was a greater risk from not implementing option 2, including more uncertainty for
staff and delayed benefits.
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•  Option 2 differed from the option that the Board had approved in August 2018, by pushing
out staff consultation and technology deployment by two to three months, and
implementing the technology in two phases.
•  For the February 2019 Board meeting, Management would propose a clear plan for rollout,
with an updated cost position and updated benefits and any impacts to ICIP. Management
was confident that the benefits would remain intact.
•  Also in February, Management would report on the proposed Phase 3 of staff consultation
and the external stakeholder engagement plan. Management would also be seeking
approval for additional funding. The Minister would then be updated.
Mr Fletcher added that the key for him was that option 2 provided a much more comfortable risk
profile. Going with the one-launch altogether would mean a higher risk profile. Option 2 had more
advantages and put ACC into a deploy-and-learn model.
The Board Chair returned to the meeting and the Board’s discussion focused on the following:
•  What the main difference was between options, from a staff perspective. Mr Fletcher
confirmed that under option 2 some people would have the rollout in two steps.
•  The philosophy of the process coming first and then the technology. This had been
discussed last year and had received pushback from Management. In response to the
Board’s query regarding what had changed since last year, Ms O’Connor explained that
there was a lot of technology proposed to come online in August 2019. This was quite
different from the talk in August 2018 about rolling out Launch Pad straightaway without
any of the technology in place.
•  A simple explanation of the increases in cost should be provided to the Board for the
February decision. The elements of the pricing needed to be split out, and the risk/cost
trade-off needed to be looked at and explained carefully. Mr Fletcher acknowledged that a
breakdown of the costs and the pricing was necessary. The shift in costs was not entirely
related to the shift in approach, and that needed to be properly explained.
•  The planning for testing of cases, given the case mix would change over time.
Ms O’Connor explained that the testing in Launch Pad had had 15 months of claims
through it. Over the past four to five months, complexity had been gradually added to the
Launch Pad environment. Ms O’Connor was confident that there would be no surprises.
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•  The increases that had occurred over time of the costs for Next Gen. The Board asked for
the cost difference between option 1 and option 2. Ms O’Connor explained that, because of
the extra transitional work, option 2 would be slightly more expensive. Details on the costs
would be provided to the Board in February. For the present, Management was asking the
Board for direction, to allow Management to work out the full costs.
•  The difficulty of being asked to decide on an option without being told what the costs were.
The Board asked whether a decision on the options was needed at this meeting. Mr Tully
confirmed it was, and clarified that he did not think the extra cost between options 1 and 2
would be large. But there could not be much confidence in the numbers until there was
further analysis of the costs.
•  Whether approval in principle, subject to the final approval in February on the basis of fully
disclosed costs and benefits, would be sufficient. Mr Pickering confirmed that that would
work wel .
•  The Board emphasised the serious concerns it had expressed regarding whether enough
was known now. As for the confidence that would be available even in February, it needed
to be given serious consideration. The Board asked that the paper be provided to
Ms Murphy and Ms Mazzoleni for review and comment before being submitted to the full
Board. Ms O’Connor was asked to think, in advance of providing the draft paper to them,
about what was not known about process and technology integration.
•  The impact of staff uncertainty about their roles. Ms O’Connor explained that, with option 2,
the uncertainty would go on until May-June 2019. Under option 1, role certainty would not
be attained until possibly Christmas 2019.
•  The Net Promoter Score and the Pulse survey, noting that it could be difficult to maintain
staff motivation when a percentage knew they were not going to have roles in the future.
Ms O’Connor acknowledged the concern but explained her greater concern related to not
giving staff any certainty at all, which would significantly impact retention and recruitment
during the notice period. Mr Tully suggested that, provided ACC offered to work with
individuals if they wanted to stay, move, or leave, and provided ACC was transparent as it
had been in the past, the notice period should go relatively smoothly.
The Board agreed to approve option 2 in principle, subject to the full costs and benefits information
being provided for its February 2019 meeting.
RESOLVED: The ACC Board resolved to:
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(a)
Note that NGCM remains a strategic enabler of Shaping our Future and to delivering a
customer-centric organisation.
(b)
Note the progress made since the last Board update.
(c)
Note the current challenges around confirming technology solutions and user requirements
for:
i.  Eos simplification and development required to build scale and full scope.
ii.  Architectural integration and other project dependencies.
iii. Telephony, especially the functionality required for hubs.
(d)
Note that options to address the chal enges have been identified and a revised roll out
approach recommended in this paper.
(e)
Note the updated risk assessment for the recommended roll out state.
(f)
Note that the proposed total financial benefits of the project remain unchanged, although
realisation timing might be impacted dependent on the option chosen.
(g)
Note the drawdown of $3.1 mil ion to enable the project to continue for February made
under the delegation of the Chief Executive until the Board are provided with an updated
cost and benefit analysis in February 2019.
(h)
Note that funding request wil  be presented to the Board in February 2019 incorporating the
details of the option chosen in this meeting. The request wil  represent an increase in
funding (estimated between $10-15 mil ion) required to complete the roll out of NGCM over
and above the contingency currently associated with this specific project ($17-22 mil ion in
total). Note that this revised total remains within the overall cost parameters of ICIP.
(i)
Approve in principle the recommended Option 2 to roll out the operating model and
possible technology from August 2019, with full technology integration coming in November
2019, subject to the Board’s consideration of full information on costs and benefits at its
February 2019 meeting.
Review of Board Policies
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The Board asked that this paper to be held over for the February 2019 Governance and
Remuneration Committee meeting, and then consideration by the Board.
  Performance Reports
Health, Safety and Wellbeing Report
The paper was taken as read.
RESOLVED: The ACC Board resolved to:
(a)
Note actions underway to mature our safety system, demonstrate safety leadership and
strengthen our safety culture.
(b)
Note there were no notifiable events in December 2018.
(c)
Note the health and safety performance indicators.
Legal Report and Policy Update
(a)
Legal Report
9(2)(h)

(b)
Policy Update
Page 9 of 13

Ms Powell explained that there would be a number of reports coming to ACC soon from other
agencies and that Management would be seeking Board comments on responses to them. She
also pointed out that the updated ICIP Cabinet Paper would be considered by Cabinet Committee
on 14 February 2019. The Board asked for a paragraph to be included in the ICIP Cabinet Paper
that reflected the discussion the Board had just had on Next Gen. Approval of any further changes
to the Cabinet Paper would be delegated to the Board Chair, and Mesdames Murphy and
Mazzoleni, but the Paper was to be distributed to all Board Members.
Regarding the Mental Health Inquiry, Ms Roche explained that the cross-government response
was likely to be available in the first two weeks of February. Management would draft a suggested
ACC response for Board consideration before sending. There would also be the Welfare Expert
Advisory Group report to the government, and the State Sector Act review coming soon. Al these
would need a Board review of responses. The Board asked that all three be circulated to all Board
Members, but delegated sign off of the responses to the Board Chair and Mr Miller.
In response to a Board query regarding who had initiated the funding policy review, Ms Roche
explained that it initially came from the Treasury. ACC had received draft Terms of Reference
(ToR) for the review, and had some concerns. There was to be a meeting on 4 February 2019 to
go through the ToR. Ms Roche explained that she was wanting to work as equal partners with
Treasury and MBIE, rather than ACC simply commenting on their paper. The Board asked that
Ms Roche come back to the Board before agreeing to the ToR. Ms Roche explained that she was
hoping to receive a revised ToR after the meeting on 4 February.
Ms Roche provided an update on her recent meeting on the Health and Disability Review, which
had been positive. Ms Roche asked the Board for a steer on whether ACC should write a paper to
signal its views on the Review, rather than simply wait for the Review. The Board agreed, provided
Ms Roche had resource to do it. Since the Review was due to be reported back in June/July 2019,
Ms Roche would provide a draft to the Board in April (or May at the absolute latest), so that it
would be sent in time to have an impact.
ACTION: Management to Provide a a paper to the April 2019 Board meeting (May at the absolute
latest) to signal ACC’s views on the Health and Disability Review.
RESOLVED: The ACC Board resolved to:
(a)
Note the current areas of policy activity.
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(b)
Note that the section 331 reports on the implications of the prescribed levy rates agreed by
Cabinet wil  come to the Board for approval out-of-cycle in early February, ahead of the first
set of regulations being considered by Cabinet later in February.
(c)
Approve the attached revised version of the ‘Accident Compensation Corporation February
2019 Service Transformation Progress Update’ Cabinet paper.
(d)
Note that we expect to be able to provide the Board with a draft proposed TOR for the
review of the funding policy for the Non-Earners’ and levied accounts, for comment, as an
out-of-cycle paper in February.
(e)
Note we wil  provide the Board with an out-of-cycle paper in February with details of the
cross-government response to the Mental Health and Addiction Inquiry and OECD Mental
Health and Work Aotearoa/New Zealand reports. We wil  include a proposed ACC
response for your comment.
(f)
Note we wil  provide the Board with an out-of-cycle paper in February with a proposed
response to a series of draft Cabinet papers from the State Services Commission
containing policy proposals for a new Public Services Act.
(g)
Delegate to the following Board Members authority to respond on behalf of the Board on
Management proposals for:
i.  ICIP Cabinet Paper—the Board Chair, the Chair of the Risk Assurance and Audit
Committee (RAAC), and Ms Murphy
ii.  The ToR for the funding review, if urgent approval was needed—the Board Chair, the
RAAC Chair, and Mr Mil er
iii. Mental Health Inquiry cross-govt response, WEAG report and State Sector Act reform—
the Board Chair and Mr Mil er.
  Board Administration
Minutes of Meeting held on 20 December 2018
The Board indicated that it wanted some amendments to the minutes of the meeting held on
20 December 2018, and asked that they be reconsidered at the next meeting.
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Schedule of Matters Arising
The Schedule of Matters Arising was held over to the next meeting.
Confirmation of Decisions Made Out of Cycle
The confirmation of decisions made out-of-cycle for the period 14 December 2018 to 17 January
2019 was held over to the next meeting.
Annual Work Programme
The annual work programme was held over to the next meeting.
  General Business
The Board Chair acknowledged that this was Mr Janes’ last ACC Board meeting and she thanked
him, on behalf of the Board, for his contribution to the Corporation, particularly for his vast and
impressive contribution to the Investment side of business for almost 20 years. She also
acknowledged his role as Deputy Chair, which had been critical to helping the Board achieve the
programme of change that ACC was undertaking. The Board Chair also acknowledged her own
good fortune in having had such a helpful Deputy Chair. She had hugely appreciated that. She
invited Mr Janes to join the Board dinner in February that would be held to welcome the two new
Board Members.
In Board-Only time, the Board had resolved to appoint Mr James Mil er as Chair of the Board
Investment Committee, commencing on 1 February 2019.
  Confirmation of Next Meeting
To be held at the ACC Boardroom, Level 11, PwC Tower, 188 Quay Street, Auckland on Thursday
28 February 2019 at 9.00 am.
Closure
The meeting closed at 4.00 pm.
Approved
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Chair ………………………………………………………….
Date ………………………………
Page 13 of 13

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