13 Minutes of meeting 19 December 2019 Redacted.pdf

Minutes of a meeting of the Board of the Accident Compensation Corporation held via
videoconference on Thursday, 19 December 2019 at 9.00 am.

Present
Dame Paula Rebstock
Chair

Ms Anita Mazzoleni
Member

Mr James Mil er
Temporary Deputy Chair

Mr David May
Member

Ms Kristy McDonald QC
Member

Dr Tracey Batten
Member

Mr John Brabazon
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 Sharon Champness
Chief Talent Officer

Ms Gabrielle O’Connor
Head of Client Service Delivery
Item 3.1
Mr Paul Dyer
Chief Investment Officer
Item 2.2
9(2)(a)

Executive Advisor
Item 2.2
9(2)(a)

Head of Workplace Safety & Levies
Item 4.1
9(2)(a)

Senior Policy Advisor
Item 4.1
9(2)(a)

Head of Health, Safety and Wellbeing
Item 5.1
Ms Ainsley Simmonds
Acting General Counsel and Company
Secretary

9(2)(a)

Manager Corporate Secretariat

9(2)(a)

Senior Associate Company Secretary

  Procedural Business
Apologies
There were no apologies received for the meeting.
Register of Members’ Conflicts of Interest Arising
CONFIRMED: The Board reviewed the Register of Members’ Conflicts of Interest Arising and
confirmed that it was not aware of any other matters (including matters reported to, and decisions
made by, the Board at this Meeting) which would require disclosure.
  Board Only Session
Chief Executive’s Report
Items raised by Mr Pickering were:
•  Whakaari/White Island – debrief and update.
•  Surgical mesh issue update.
•  Location update – Hamilton, Dunedin and Albany.
•  Gateway review update.
•  Investment Office update.
•  ACC – Zero Carbon Act discussion.
RESOLVED: The ACC Board resolved to:
Note the Chief Executive’s Report.
ACC – Zero Carbon Act Discussion
The Board discussed a draft discussion paper that had been provided by Management that
morning on the Zero Carbon Act. Mr Dyer briefed the Board on the content of the paper, including
possible broad options that could be adopted by ACC to reduce the carbon footprint of its portfolio
over time. Board discussion focused on the following:

•  The Board was aiming for full compliance with the Government’s expectations as expressed in
legislation and in documents such as the annual Letters of Expectations, and also with ACC’s
Ethical Investments Policy. Regarding option 4, the second bullet point (i.e., to exclude from
the portfolio businesses which spend >30% of their revenues on thermal coal with no clear
path to reduction), Mr Dyer confirmed to the Board that it was not yet known to which investee
companies this would apply and that it was only those in respect of the first bullet point (i.e., to
exclude those which generate >30% of their revenues from thermal coal) that were known. He
also confirmed that ACC could exclude those in the first bullet point without excluding those in
the second. The Board agreed that options 1 to 4 (first bullet point) should be executed quickly,
while for options 4 (second bullet point), 5, and 6 further consideration was needed.
•  Whether ACC should develop its own carbon policy, to become a leader in this area, and
obtain senior leadership expertise in the area.
•  How quickly ACC’s $52 mil ion of coal stocks should be exited, and whether it was possible to
reward carbon users for good practices that reduce their carbon use.
•  The importance of setting a baseline measure and of improving ACC’s ESG reporting.
ACTIONS: In relation to the Zero Carbon Act, Management to—
•  Provide the Board with a workplan, al ocating the tasks to appropriate areas of the business.
•  Provide an overarching Framework for all of ACC (including the investment function), and a
principles-based Policy.
•  Provide an analysis of the option 4 second bullet point exclusions.
•  Provide, via the Board Investment Committee, advice on the further steps ACC wil  need to
take as a significant investor.
RESOLVED: The ACC Board resolved to:
(a)  Agree to implement by mid-February 2020 options 2, 3, and the first bullet point of 4, as set
out in the draft paper, being:
•  Aligning with other groups focused on climate change;
•  Portfolio monitoring of greenhouse gas emissions;

•  An exclusion policy that excludes from the portfolio businesses that generate greater than
30% of their revenues from thermal coal.
(b)  Direct Management to provide analysis to the Board on the exclusions that would result from
implementing the second bullet point of option 4 (i.e. excluding from the portfolio businesses
that spend more than 30% of their revenues on thermal coal with no clear path to reduction).
(c)  Note that Management advised the Board that, having undertaken preliminary analysis,
implementing the exclusion policy referred to in Resolution (a)—
•  could be achieved quite quickly; and
•  would result in a modest negative impact on the portfolio, through removing the
17 identified companies, in which ACC had c.$52 mil ion invested.
(d)  Direct Management to provide advice to the Board, via the Board Investment Committee, on
the further steps ACC wil  need to take as a significant investor.
(e)  Direct the Chief Executive to provide to the Board an overarching Policy and a Framework
for all of ACC that also covers the Investment function.
  Operational Reporting
  (a) ICIP Reporting
Mr Fletcher highlighted the successful imbedding of Next Generation Case Management (NGCM)
and Client Payments 2 deployments. Ms O’Conner briefed the Board on key achievements with
NGCM, focusing on the following:
•  Ten percent of overall claims volume was now through NGCM, and 80% of short-term claims
were going through the STCC recovery team in Dunedin.
•  Low complexity claims were not yet seeing the full effect of the new ways of working, as many
of the claims were migrated from the previous systems.
•  Vocational rehab was achieving similar positive performance to that which had been achieved
in LaunchPad.
•  Migrated clients using the Heartbeat feedback tool had provided a lower overall satisfaction
result than in LaunchPad. This was likely due to the migration over to Heartbeat of older

grievances. However, feedback cases were being closed out, on average, a whole day faster
than in LaunchPad.
•  Ninety-four percent of tasks were completed within Service Level Agreements.
•  A high proportion of staff in the Tranche 1 rol out were new recruits. Their engagement and
speed to competency were impressive. In the ENPS scores, the Tranche 1 results were above
the rest of the country. Staff were very engaged, and this would impact the KPIs.
The Board discussed the update, noting that Management should be proud of the tremendous
progress. The Board asked if there were any areas other than Vocational rehab where
Management could expect to see improved cost performance under NGCM. Ms O’Connor would
cover this in the March 2020 NGCM update to the Board.
In response to a Board query, Ms O’Conner commented that she was extremely pleased with the
progress throughout the year, particularly with how the deployments had gone, and that the uptake
from the frontline had exceeded expectations. The Board noted that it was now time to switch
attention to ICIP benefits realisation.
In response to a Board query regarding the Health Sector Strategy (HSS) deadlines referred to in
the report, Mr Tully explained that two of the six ECP contracts had been signed, with two more
very close to signing, and that the first claims had already started coming through. A note would be
provided to the Board before Christmas regarding the HTI POC issues.
Mr Fletcher reported that: benefits were stil  tracking amber overall; a Management team had been
established to develop detailed benefits reporting to the Board; a continuous delivery quarterly
planning session had taken place during the week with Treasury, GCDO and the Ministry of
Health; and the draft ICIP Cabinet paper had been provided to the Minister.
In response to a Board query on the Business Continuity Plan issue for Investments technology,
Mr Fletcher reported that his team had created virtual machines to enable members of the
Investments Team to work remotely.
ACTION: Management to include further opportunities for improved cost performance in the
March 2020 NGCM progress report.
RESOLVED: The ACC Board resolved to:
(a)  Note the ICIP November 2019 Monthly Update.

(b)  Note the Investments Technology Issues Report.
3.1 (b) Operational and Financial Performance including Claims Costs
Mr Healy reported that the softening of the claims growth trend was continuing, but had been offset
by wage inflation, and in terms of rehab performance more claimants were remaining on the
Scheme, impacting costs. This had slightly improved for November, but was stil  above the year-
end target. There had been a marked increase in fatalities claims and this impacted the Serious
Injury rate. Ms Powell explained that the claim patterns raised queries about potential mis-claiming.
Management was investigating this.
The Board’s discussion focused on the following:
•  Whether Mr Healy had modelled short-term claims rehab scenarios for results that could be
sustained and that would both impact the annual result and enable ACC to understand what
good looks like—Mr Healy would work on the modelling.
•  Whether the budget was accurate and reasonable—Mr Healy confirmed that it was good in
some areas such as claims costs; return to work performance had been realistic and had been
adjusted in the budget the previous year; and as NGCM continued to roll out, he would
reassess the target for the following year. He noted that it would be challenging to gauge
realistic targets until the NGCM rollout was complete.
•  The impact of recent rises in interest rates—Mr Healy reported that, up to 18 December, bond
yields had increased to the point where ACC now had a $1.4 billion surplus. He was confident
that it would stil  be positive at the half year end. Mr Healy also reported that the single
effective discount rate had increased and was now higher than in June 2019. This would have
a negative impact on investments, but that was much smaller than the positive impact on the
OCL. In addition, Cabinet had approved the new Funding Policy. This gave more confidence
that ACC would be on a better trajectory in the future.
•  Reported increases in FTE across operations and corporate—Mr Healy would check this and
report back to the Board.
•  The reported high impact event in Eos on 4 November—Mr Fletcher responded that there were
no residual concerns; the root cause of all events had been identified.

•  The higher than expected average treatment cost per claim—Management was working with
Provider Service Delivery on the elements of this.
•  Whether the impact on the deficit in the income statement showed in the Aide Memoire to the
Minister—Mr Healy had not included the impact on the balance sheet. The Board asked
Management to consider whether it would be useful to provide this to the Minister.
ACTION: Management to model the short-term rehab rates results to see what could impact the
annual result.
RESOLVED: The ACC Board resolved to:
(a)  Note the Claims Cost performance.
(b)  Note the Operational and Financial Performance.
(c)  Note the information provided in the Aide Memoire.
  Board Papers
Revised Levy Setting Round Timetable and Proposed Consultation
The Board queried whether the timing of levy consultation was legally the Board’s decision or the
Minister’s decision. Ms Powell explained the convention that ACC operates under, with public
consultation having to be agreed by Cabinet.
The Board discussed with Management the scenario of a delay in forming a Government post-
election. Ms Roche explained the process that operates through DPMC to ensure that statutory
timeframes will be met post an election. Ms Powell confirmed that Management had briefed the
Minister on the risks and constraints associated with the timing.
The Board asked Management to urgently provide a clear legal view as to who makes the final
decision regarding the timing of the levy consultation—the Board or the Minister. The Board
discussed the political implications of this. The Board asked that all the recommendations in the
paper, except (c) in so far is it related to content, and the paper itself, be held over until the legal
advice was received. The Board suggested that the paper may need to be withdrawn because of
the way it was written. The Board delegated authority to the Board Chair, Mr Mil er and
Ms McDonald QC for final approval of the recommendations once the advice was received.

RESOLVED: The ACC Board resolved to:
(a)  Agree to include the following items in the consultation:
i.  ER Phase 2, to strengthen consequences for unwanted performance, and ER
Groupings; and
ii.  E-mobility services.
(b)  Note that Management would urgently provide legal advice as to whether the Board or the
Minister makes the final decision regarding timing of the levy consultation.
(c)  Delegate authority to the Board Chair, Mr Mil er and Ms McDonald QC to approve
recommendations for levy consultation following receipt of the legal advice.
  Performance Reports
Health, Safety and Wellbeing Report
The Board took the Report as read. Ms Champness highlighted the Client Service Delivery
Campaign. The Board thanked Ms Champness and Ms Vautier for the good year of work.
RESOLVED: The ACC Board resolved to:
(a)  Note progress toward becoming a leader in heath, safety and wellbeing.
(b)  Note there were no notifiable events in November 2019.
(c)  Note the health, safety and wellbeing performance indicators.
Legal Report and Policy Update
(a)  Legal Report – LEGALLY PRIVILEGED
The Acting General Counsel summarised the report. The Board discussed the disclosures
reporting appended to the report, focusing on the following:
•  In response to a Board query, Ms Simmonds confirmed that the reporting was solely for
internal use.

•  In respect of the feedback loop, and how a whistle-blower would know that the issue had been
closed out, Ms Simmonds noted that closeout would depend on the particular issue and
whether it had been processed through Talent or Integrity Services. The Board suggested that
Ms Simmonds engage with the Chief Talent Officer about this.
•  Whether a post-review process would be helpful following an investigation, as it could be
gruelling for both the whistle-blower and the alleged wrong-doer.
RESOLVED: The ACC Board resolved to:
(a)  Note ACC has provided information on suing for personal injury to the Royal Commission
into Abuse in State and Faith-based Care.
(b)  Note Ng – treatment injury the Court of Appeal has given a preliminary view that ACC’s
further evidence wil  be admitted.
Disclosures reporting
(c)  Note that the Disclosures Committee has oversight of and triages all reported instances of
suspected wrongdoing and serious wrongdoing.
(d)  Note that work is underway to ensure a prevention-led approach is taken in raising
awareness of the OK2Say reporting channel.
(e)  Note that the Disclosures Committee recently reviewed ACC’s processes against the State
Services Commissioner’s “Speaking Up” model standards and have determined that ACC’s
policies and procedures are compliant.
(f)  Agree to receiving annual reports on disclosures and the application of the Protected
Disclosures Policy and procedures once ratified by the Disclosures Committee.
(b)  Policy Update
Ms Roche introduced the Policy Update.
The Board queried whether it should be made explicit in the Public Service Bil  that, in the case of
conflict between a Crown agent’s statutory framework and the Bil , the Crown agent’s statutory
framework prevails. The Board noted the statement in the report that Management was hopeful
that ACC’s view would be considered for future drafts of the Bil , and queried why ACC was not

intending to submit on this point. The Acting General Counsel explained the accepted legal
position that specific obligations in a Crown agent’s statutory framework would override the general
points of the Bill.
The Board suggested that if the issue was important ACC should make a submission on this point,
noting that it was preferable to avoid legal challenges due to the conflict of provisions issue not
having been made explicit in the Bil .
The Board asked Management to clarify its view on whether to make a submission. The Board did
not agree to recommendation (i) of the Policy Update.
RESOLVED: The ACC Board resolved to:
Legislative modernisation
(a)  Note that the Minister intends to progress a bid for the 2020 government legislation
programme, and to seek associated policy decisions from Cabinet in February 2020.
(b)  Note that the Board has previously considered most topics intended for the Minister’s
legislation programme bid.
(c)  Agree to support the inclusion of two further topics in the Minister’s legislation programme
bid:
i.  Aligning the timing of changes to the minimum ful -time weekly compensation rate with
when changes to the minimum wage come into effect.
ii.  Amending legislation so that consequential conditions are covered as part of the original
causative injury claim.
(d)  9(2)(f)(iv)

Ministry of Health Budget 2020 proposals
(e)  Note that cost estimates are available for a Ministry of Health Budget 2020 proposal to
reduce co-payment costs for clients.

(f)  Note that the most costly option to reduce co-payment costs for clients would increase the
outstanding claims liability by $28.4 mil ion in 2021/22, rising to $32 mil ion in 2025/26.
ACC Funding Policy Review
(g)  Note that Management wil  provide a verbal update about Cabinet’s consideration of the
Cabinet paper proposing changes to ACC funding settings.
Public Service Legislation Bil
(h)  Note that ACC Legal has reviewed the Public Service Legislation Bil  to assess any potential
legal risk, in light of the changes made to the Bil  before it was introduced.
(i)
Note that the Board wil  be updated of any changes that affect ACC as the Bil  progresses
through the select committee phase.
  Board Administration
Minutes of Meeting held on 27 November 2019
APPROVED: The ACC Board approved the minutes of the meeting held on 27 November 2019,
subject to adding a Matter Arising regarding the OCL action plan.
Schedule of Matters Arising
The Board discussed the Schedule of Matters Arising and asked that all Matters have due dates.
In response to a Board query regarding the HTI POC and the ‘regularisation’ information,
Corporate Secretariat noted that the due date for the HTI POC Matter was January 2020. The
regularisation information would also be provided to the Board soon.
The Board noted the Schedule of Matters Arising.
Confirmation of Decisions Made Out of Cycle
RESOLVED: the ACC Board resolved to:
Note that there were no decisions made out of cycle for the period of 22 November 2019 to
12 December 2019.

Annual Work Programme
NOTED: The ACC Board noted the annual work programme.
  General Business
The Chair of the HSS Advisory Committee reported that, regarding the independent member who
had not attended the Committee’s meeting in November 2019, she had spoken with the member
who confirmed she was committed to the role and would be attending the Committee meetings in
future.
  Confirmation of Next Meeting
To be held via video/audio conference on Wednesday, 29 January 2020 at 1.00 pm.
Closure
The meeting closed at 12.45 pm.
Approved

Chair ………………………………………………………….
Date ………………………………