ACC4257 Annual Report 2007.pdf

Presented to the House of Representatives
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pursuant to section 150 of the Crown Entities Act 2004
Accident Compensation Corporation
Annual Report
2007

Our Vision
Freedom from injury and its consequences,
for everyone in New Zealand
Our Values
Honour people
Freedom to
Pride in what
as People
succeed
we do
Our Strategic Priorities
E
M
P
O
W
E
R
Ensuring
Maintaining
People-focused
Open and fair
Working
Efﬁ cient,
Rehabilitation
New Zealanders
fair and stable
with good
access for all
to reduce
sustainable
focused on
have conﬁ dence levies
outcomes
New Zealanders
injuries and
and ﬂ exible
returning to
in ACC
occupational
organisation
productive life
diseases
2007 Service Highlights
In 2006–2007, ACC staff at 48 locations looked after 1.8 million claims from injured people in New Zealand.
Every day, injured people, levy payers and health providers contact ACC – our staff sent almost 24,000 letters,
answered over 23,000 telephone calls and looked after 7,000 claims each day.
ACC also paid for more than 3.1 million visits to physiotherapists, 2.5 million visits to GPs and other
treatment providers, 200,000 sessions of vocational rehabilitation, and social rehabilitation support on
1.7 million occasions.
To provide care for injured people, levies paid for rehabilitation, compensation and administration costs
amounting to $2,825 million.
Through good care and world-class programmes, injured people return to productive life as quickly as
possible. Rehabilitation rates were high – with 65% of injured people returning to productive life within three
months, 83% within six months and 92% within a year.

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Contents
Part One
From the Minister .................................................................................................................3
From the Chair ......................................................................................................................5
From the Chief Executive .......................................................................................................7
Performance reporting ......................................................................................................... 9
Part Two
Statement of Service Performance....................................................................................... 11
Part Three
Levies, Investments and Claims Liability .............................................................................43
Part Four
Corporate Governance ........................................................................................................ 57
ACC Subsidiary Companies ................................................................................................ 66
ACC Board Members .......................................................................................................... 68
ACC Executive Leadership Team .......................................................................................... 71
Part Five
Financial Statements ........................................................................................................73
1

ACC at a Glance
ACC is a Crown entity, set up by the New Zealand Government to provide comprehensive, 24-hour, no-fault
personal injury cover for all New Zealand residents and visitors to New Zealand. ACC’s role is to prevent injury,
treat it where it occurs, and rehabilitate people back to a productive life as soon as is practicable. ACC has its
own Board of eight members appointed by the Minister for ACC.
All taxpayers, employers, self-employed people and motor vehicle owners contribute to the funding of the
ACC Scheme. The Government also funds part of the Scheme for people who are non-earners, such as children
and the elderly.
Cover is managed under six (previously seven) Accounts.
Work
Covers all work-related injuries.
Non-
Covers injuries to people not in
Account
Earners’
the paid workforce: students,
Funded from levies paid by
Account
beneﬁ ciaries, older people
employers and self-employed
and children.
people.
Funded by Government.
Net levy income: $639 million
Net levy income: $719 million
Claims liability: $1,267 million
Claims liability: $2,398 million
Earners’
Covers non-work injuries (including
Treatment
Covers injuries arising from
Account
at home, and during sport and
Injury
treatment.
recreation) to earners.
Account
Funded from Earners’ and Non-
Funded from earners’ levies (paid
Earners’ Accounts.
through PAYE), plus self-employed
Net levy income: $121 million
levies based on earnings.
Claims liability: $886 million
Net levy income: $905 million
Claims liability: $2,453 million
Residual
Covers the continuing cost of work-
Motor
Covers all personal injuries
Claims
related injuries sustained before 1
Vehicle
involving motor vehicles on
Account
July 1999 and non-work injuries to
Account
public roads.
earners before 1 July 1992. Funded
Funded from petrol excise duty
from levies paid by employers and
and a levy collected with the motor
self-employed.
vehicle relicensing fee.
Net levy income: $315 million
Net levy income: $590 million
Claims liability: $2,767 million
Claims liability: $3,964 million
ACC Total
Net levy income: $3,290 million Claims liability: $13,735 million
2

Part One
From the Minister Hon Ruth Dyson
During the past year, ACC’s contribution to the Government’s policy goals has been particularly
signiﬁ cant.
Working in close partnership with other agencies and organisations, ACC has achieved outcomes
that strongly support the Government’s key priorities – economic transformation, families and
national identity.
A fair and sustainable Scheme that minimises both the overall incidence of injury and its impact
on the community plays a vital (if often unappreciated) role in our nation’s economy.
Throughout 2006–2007, ACC’s co-operative efforts with the Department of Labour and other
partners in the New Zealand Injury Prevention Strategy to create a safety culture have made
encouraging progress. At the same time, ACC has collaborated with the Ministry of Health,
District Health Boards, Ministry of Social Development, employers, unions and health providers
to minimise the social and ﬁ nancial impact of injury.
Under ACC’s strategic plan, major developments across the full range of ACC’s responsibilities
have been achieved throughout the year, but it is particularly pleasing to note progress in two
areas of major signiﬁ cance: rehabilitation; and initiatives preventing, treating and compensating
people for occupational diseases.
In keeping with the 2006 ministerial service agreement, ACC outlined a three-year
implementation plan for the new groundbreaking Rehabilitation Framework. The Framework is
a long-term strategic project that focuses on helping injured people ‘achieve an everyday life.’
While the Framework aims to boost rehabilitation performance overall, it is designed to offer
particular support to people who are likely to have long-term needs.
Also in accordance with the service agreement, ACC worked with the Department of Labour and
the Ministerial Advisory Panel on Work-Related Gradual Process Disease and Infection. Following
ofﬁ cial advice and public consultation, the Government intends to update Schedule 2 of the
Injury Prevention, Rehabilitation, and Compensation Act 2001 by Order-in-Council. ACC has also
supported the Department of Labour with the medium-term work programme on work-related
gradual process disease and infection.
By actively engaging in more collaborative planning with others, ACC has steadily enhanced its
effectiveness in producing positive outcomes for all New Zealanders. The outcomes achieved
throughout the year have been of beneﬁ t not just to the economy as a whole but to many
thousands of individuals and their families throughout the country.
ACC has also intensiﬁ ed its drive to deliver a service to the public, injured people, levy payers
and health providers that is more responsive to those customers’ needs. In just 12 months, ACC’s
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heightened customer awareness has raised the level of public conﬁ dence in ACC – an important
step towards people having a greater knowledge of New Zealand’s unique Scheme and an
appreciation of its internationally unparalleled beneﬁ ts.
I wish to thank the Board, management and staff of ACC for their commitment to the delivery of
the Government’s objectives and commend them on their willingness to work so readily and well
in partnership with others.
This outward-focused culture of the organisation has enabled it to achieve truly encouraging
outcomes throughout the year.
Ruth Dyson
Minister for ACC
4

From the Chair Brenda Tahi
In 2006–2007, ACC’s 33rd year, we have made major progress towards our strategic priorities and
produced some excellent results. Of particular note, our increasing customer focus is helping us
to achieve each of our strategic priorities.
We have been focused on ensuring New Zealanders have conﬁ dence in ACC, given that in the
past this has not always been the case. We are pleased to report that the rise in public trust and
conﬁ dence in ACC this year is outstanding. The extent of the rise, which is more than that of all
but one of the other 19 public sector organisations surveyed by Research New Zealand, is most
encouraging. Further, we have engendered better understanding of the services and entitlements
we offer New Zealanders. Over the next year, ACC will continue to improve public understanding
by ensuring communities, businesses and individuals have easy access to information about
entitlements.
In the face of rising costs for treatment of the injured, it is an ongoing challenge for ACC to
maintain fair and stable levies. However, to this end, the average levy rates were held within
the target of no more than a 5% change for most groups of levy payers. Our investments help in
this regard, and in this year our returns exceeded market benchmarks by 0.4%. For levy payers,
satisfaction levels for the largest employers increased and exceeded the targets. Although the
satisfaction level for small to medium employers continued to outperform in a difﬁ cult year,
we are introducing improvements to the way we work with smaller businesses. Throughout the
coming year, new initiatives will include delivering online levy payment options, implementing
the levy data strategy and reﬁ ning levy Scheme products to better suit the needs of businesses.
As an organisation that is ‘people-focused with good outcomes’, ACC has worked hard during the
year to improve claimant satisfaction, which has risen overall from 77% in 2005–2006 to 82% in
2006–2007. By empowering our business units to directly resolve complaints, we have managed
to nearly halve the number of complaints referred to the Ofﬁ ce of the Complaints Investigator.
Satisfaction increased for all claimant groups and met targets with the exception of Ma¯ori
claimants. Implementation of the Ma¯ori Access Strategy will result in improved services for Ma¯ori,
which in turn will drive better results in Ma¯ori claimant satisfaction.
We aim to ensure that all New Zealanders have open and fair access to the ACC Scheme, and we
have worked hard to engage and inform groups that have serious disparities in their access to
the Scheme. Our achievements in this area have delivered greater access for these groups – the
number of claims per 1,000 population has increased across Ma¯ori, Paciﬁ c and Asian groups. We
have also developed detailed access strategies for each of these groups for implementation in
ensuing years.
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We have focused on the prevention of injury and occupational disease as a major responsibility
for ACC. The results: a signiﬁ cant reduction in workplace injuries this year, with the 8.3% decline
in claims in the six priority industry sectors exceeding the target reduction of 0.5%.
We also aimed to reduce claims rates overall this last year. However, our campaign to lift public
understanding of the Scheme and to improve access has resulted in a 5% increase in the volume
of processed claims (now totalling nearly 1.8 million for the year or 7,000 every working day).
This highlights the need for us to focus on delivering effective injury prevention programmes to
minimise the impacts of injury on our country.
For those injured, we seek to ensure that the rehabilitation provided will help to return people
to an everyday life. This year we have met a number of our targets for timely rehabilitation of our
claimants. However, we are conscious that we need a new approach to make a real difference in
this area. To this end, we have developed a new framework for improving rehabilitation for long-
term claimants. Implementation of a number of initiatives stemming from the framework will be
rolled out over the next 18 months.
ACC also remains focused on being an efﬁ cient, sustainable and ﬂ exible organisation. In this
ﬁ eld we are pleased to report that administration costs were well under budget and costs per
claim within target.
Levy revenue was $338 million in excess of budget, due to higher than forecast earnings, and
investment returns exceeded budget by $228 million. Against this income, claim costs exceeded
budget by $118 million due to higher social rehabilitation and weekly compensation costs
associated with increased claim volumes. Over the next year, ACC will manage its administrative
cost per claim at target levels lower than those for the year under review.
The year’s excellent results have been achieved in partnership with others – with fellow
government agencies and with claimant, treatment provider, caregiver, employer, employee and
community groups. I wish to thank everybody who has worked with us so constructively, and
supported us so positively, to assist us in delivering on our responsibilities in this way.
I also wish to thank all ACC Board members and the previous Chair, Dr David Collins QC, for their
expertise and support. We have sought, as a Board, to lead positive change for ACC and to lift our
effectiveness in governance to meet the challenges that ACC faces. I consider we have achieved a
fundamental change in approach, and this is reﬂ ected in the 2006–2007 results recorded in this
report.
My last word is for Chief Executive Dr Jan White, the ACC Executive Leadership Team, and
all the staff of ACC. Your professionalism and your contribution to ACC ultimately deliver the
results for this organisation. I salute you in your dedication to meeting the needs of all those
New Zealanders that ACC touches in its work.
Brenda Tahi
Interim Chair
ACC Board
6

From the Chief Executive Dr Jan White
The 2006–2007 year provides ACC with our ﬁ rst opportunity to report in full against the priorities
of the strategic plan developed during the previous year.
This year has been one of intense effort, rewarded, as the Interim Chair has noted, by
considerable achievement.
Operationally, ACC has made major strides in becoming both more efﬁ cient and more agile to
better meet the needs of all our stakeholders.
During the year, we successfully completed two major improvements designed to enhance our
customer service delivery: one, the virtual claim folder system that has digitised all claimant
information; and two, the related Eos system – a major software-based claims management
system.
We have made a considerable investment in our staff; our most important resource. Demands on
our staff have been growing steadily with an increase in the volume of active claims each year.
We expect the rise in both claim numbers and consumer expectations to continue.
We have responded to this challenge by committing to building a culture of success. As a ﬁ rst
step, values and behaviour that will foster top performance have been shared with all staff.
Recruitment of extra staff to work at the frontline has been accompanied by ongoing training
for staff members who have contact with customers. We have also empowered staff to make
immediate decisions that can speed up a customer’s recovery – a move that is improving our
ability to get things right for people from the start. For those declining number of cases when
individuals are dissatisﬁ ed with our service, we have introduced new processes to deal with
customer issues. Under this service recovery initiative, the majority of complaints are now
resolved within four working days, and the number going forward for further investigation and
resolution has fallen 44% in the past year.
Following the progress we have made in delivering better service to customers across the board,
we have also paid particular attention to the way we can better support seriously injured people.
At any time, ACC assists 3,000 seriously injured people whose injuries are likely to have a life-
long impact.
Over the next 18 months, as part of the Rehabilitation Framework, ACC will roll out a new model
of serious injury service. This initiative will ensure that seriously injured people throughout New
Zealand receive a service that meets a consistent standard, no matter where they live. Specially
qualiﬁ ed, dedicated staff will be employed to manage the rehabilitation of those people from
within the seriously injured group, for whom a return to work (whether partial or complete) is
sustainable and beneﬁ cial.
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I welcome the willingness of staff to contribute to the development of our organisation and the
accomplishment of our strategic goals. I would like to thank staff for their commitment and their
dedication to the wellbeing of everyone in New Zealand.
Both the Minister and the Interim Chair have paid tribute to the partnership approach ACC has
adopted in undertaking our responsibilities. Similarly, I would like to thank all our partners for
their support throughout the year. Your ongoing contribution is essential if we are to achieve the
bold vision of keeping New Zealanders free from injury and its consequences. I look forward to
working with you throughout 2007–2008.
Dr Jan White
Chief Executive
Accident Compensation Corporation
8

Performance Reporting
This annual report marks a departure from those of previous years. It has been designed to place
greater emphasis on the purpose behind the report, which is accountability for performance
during 2006–2007. As a result, we have presented our Statement of Service Performance both in
a convenient summary table on page 13, and in more detailed narratives related to performance
measures under each of ACC’s strategic priorities.
The report also covers a number of key areas which provide background information for our
performance: we explain the nature of our levies, our investment philosophy and approach to
investment management, and our claims liability, all of which provide essential context for the
ﬁ nancial statements which follow. In addition, we cover corporate governance matters, including
sustainability, equal employment policies, our work with other government agencies and an
outline of the business of our subsidiary companies.
9

Part Two
Statement of Service Performance
Introduction
This report covers ACC’s service performance for the year ended 30 June 2007, against the
objectives set out in the 2006–2007 Statement of Intent. ACC’s performance framework is
summarised below.
ACC is a Crown entity existing under the provisions of the Injury Prevention, Rehabilitation, and
Compensation Act 2001 (‘the Act’) to provide comprehensive, 24-hour, no-fault personal injury
cover for all New Zealand residents (and visitors to New Zealand). Cover is managed under six
(previously seven) Accounts:
• Work Account – for personal injuries in the workplace. The Work Account was created on
1 April 2007 and incorporates the former Self-Employed Work and Employers’ Accounts1
• Residual Claims Account – for personal injuries in the workplace before 1 July 1999, or
involving earners outside the workplace before 1 July 1992
• Motor Vehicle Account – for personal injuries involving motor vehicles
• Earners’ Account – for personal injuries outside the workplace to those in paid work
• Non-Earners’ Account – for personal injuries outside the workplace to those not in paid
work
• Treatment Injury Account (formerly the Medical Misadventure Account, renamed on
1 April 2007) – for personal injuries from medical treatment.
The Act speciﬁ es ACC’s role and functions to include:
• promoting measures to reduce the incidence and severity of personal injury
• determining cover
• providing statutory and other entitlements
• collecting levies
• managing the Accounts
• administering a disputes resolution process.
1. Account-level service performance information relating to the Work Account is reported under the former Self-
Employed Work and Employers’ Accounts in this year’s Statement for ease of comparison with prior years.
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ACC’s vision – Freedom from injury and its consequences, for everyone in New Zealand – is the
ultimate outcome to which ACC aspires.
This statement conveys ACC’s vision of a nation where everyone is free from injury. ACC intends to
work towards this ultimate outcome by preventing injury, and ensuring prompt rehabilitation for
anyone who is injured. In this way, adverse impacts of injury on the individual, on the family, and
on the wider community and economy will be minimised.
ACC’s vision is supported by seven strategic priorities, which set the direction for ACC’s work for
the next ﬁ ve years:
Strategic Priority 1:
Ensuring New Zealanders have conﬁ dence in ACC
Strategic Priority 2:
Maintaining fair and stable levies
Strategic Priority 3:
People-focused with good outcomes
Strategic Priority 4:
Open and fair access for all New Zealanders
Strategic Priority 5:
Working to reduce injuries and occupational diseases
Strategic Priority 6:
Efﬁ cient, sustainable and ﬂ exible organisation
Strategic Priority 7:
Rehabilitation focused on returning to productive life.
ACC’s strategic priorities operate as an interconnected series of focus areas for the organisation.
The levy rate, as measured under the strategic priority ‘Maintaining fair and stable levies’ is the
ﬁ nancial focal point for the other strategic priorities. Although inﬂ uenced by external factors, ACC
can apply downward pressure on the levy rates by:
• reducing injury rates (through ‘Working to reduce injuries and occupational diseases’)
• helping people recover quickly (through ‘Rehabilitation focused on returning to
productive life’)
• operating efﬁ ciently (through ‘Efﬁ cient, sustainable and ﬂ exible organisation’).
The strategic priority ‘Ensuring New Zealanders have conﬁ dence in ACC’ provides the societal
focal point for the other strategic priorities. ACC can improve the public’s trust and conﬁ dence by:
• being customer-centric (through ‘People-focused with good outcomes’)
• reducing injury rates (through ‘Working to reduce injuries and occupational diseases’)
• helping people recover quickly (through ‘Rehabilitation focused on returning to
productive life’)
• ensuring people can access the Scheme when they need it (through ‘Open and fair access
for all New Zealanders’). However, improving access places upward pressure on levy rates
as it increases claim volumes.
In the short term, some of the priorities may create opposing tensions (eg working to reduce
injury rates versus making it easier to access the Scheme, both of which impact new claim
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volumes). However, in the longer term, ACC’s focus is to balance the ﬁ nancial and social drivers
of the Scheme.
ACC’s seven strategic priorities and associated objectives formed the basis of ACC’s service
performance plans for 2006–2007.
Summary of performance
Primary performance measures
by strategic priority
Comment
Ensuring New Zealanders have conﬁ dence in ACC – target achieved
Public trust and conﬁ dence
Survey results shows a steady rise in trust and conﬁ dence, from
44% at June 2006 to 53% at June 2007 – a signiﬁ cant improvement
on the target of 46% for 2007
Maintaining fair and stable levies – targets largely achieved
Levy payer satisfaction
Large employer and tax agent satisfaction rates improved on 2007
targets; small- and medium-sized employers reduced marginally
(the reduction being within the statistical margin for error)
Levy payer perceived value for
A survey was completed into the value ACC provides for levy payers,
money
and an action plan is being developed into ways of communicating
the value delivered to levy payers through ACC cover
Stable levies
Average levy rates remained steady and predictable for employers
and earners; rates for self-employed people reduced substantially;
rates for motorists rose beyond target (reﬂ ecting increased costs to
the account)
People-focused with good outcomes – targets largely achieved
Claimant satisfaction
All surveyed satisfaction levels increased, on average from 77% to
82%; a signiﬁ cant improvement in long-term claimant satisfaction
from 73% to 79%; Ma¯ori claimant satisfaction improved, but
marginally less than target
Provider satisfaction
General practitioner satisfaction up to a healthy 78%;
physiotherapist satisfaction reduced
Open and fair access for all New Zealanders – target achieved
Claim rates for Ma¯ori and Paciﬁ c
Claim rates for target populations increased although this was
peoples
consistent with the general population and for younger groups;
there was no increase in claim disparity between target groups
Working to reduce injuries and occupational diseases – targets partially achieved
Entitlement claim frequency
Claim rates increased, particularly in homes, but reduced in
workplaces and in selected areas such as rugby, which were down
5.5%
Awareness and reporting of
Survey completed and action plan to increase awareness being
occupational diseases
developed
Efﬁ cient, sustainable and ﬂ exible organisation – targets partially achieved
Staff satisfaction
Surveyed satisfaction decreased slightly from 72.2% to 70.4% in the
context of ongoing business re-structuring and signiﬁ cant business
system change
Staff attrition
Attrition during 2006–2007 consistent with 2005–2006
Cost of administering claims
Operating costs were well within budget
Rehabilitation focused on returning to productive life – targets partially achieved
Rehabilitation rates
Rates decreased due to higher claim volumes and implementation of
new system but met targets
Rehabilitation index
Performance deteriorated due to higher claim volumes and
implementation of new system
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Strategic priority 1:
Ensuring New Zealanders have conﬁ dence
in ACC
ACC’s ability to reduce injury and achieve prompt and lasting rehabilitation for every injured
person in New Zealand depends on widespread public and provider understanding of the ACC
Scheme and conﬁ dence in its delivery. Only then will everyone fully engage with the Scheme and
realise the beneﬁ ts it offers them.
ACC intends to develop and improve trust and conﬁ dence in ACC through the following outcomes:
• a better understanding by the public of the ACC Scheme
• widespread belief that ACC’s service is fair and equitable
• general acceptance that ACC looks after injured people in a helpful and positive way
• ACC earns respect as a leader in the community.
Public trust and conﬁ dence
The level of public trust and conﬁ dence is surveyed quarterly. The surveyed level of trust and
conﬁ dence increased steadily during the year and the 2006-2007 result was 53% (from a sample
of 1,826 with a margin of error of +/-2.3%). This result exceeded the target of 46% and the
equivalent 2005–2006 ﬁ gure of 44%.
ACC’s strategy to improve trust and conﬁ dence included:
• a public information campaign to increase knowledge of the Scheme and how it operates
(the ‘Covered’ campaign)
• active engagement with all stakeholders
• more responsive service delivery – emphasising greater fairness and common sense, and
at the same time reducing duplication and delay and facilitating faster issue resolution
• improved customer communication that is more customer-friendly
• stronger alignment of ACC’s internal culture with external service expectations.
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Knowledge and awareness of ACC
ACC commissioned a survey, carried out during June and July 2006, of the general public to
measure knowledge about speciﬁ c aspects of the Scheme and ACC, to set a benchmark against
which to evaluate the impact of the ‘Covered’ campaign. The survey showed that 17% of the
public felt ‘not at all informed’ about ACC, and that 80% of the public believe ‘everyone/all New
Zealanders’ are entitled to help from ACC when they are injured.
The impact of the ‘Covered’ campaign will be measured early in 2007–2008 with a follow-up
survey after the completion of the ﬁ rst phase of the campaign. The campaign aims to reduce the
percentage of the public who feel ‘not at all informed’ about ACC, and will seek to increase the
percentage of the public who feel ‘everyone/all New Zealanders’ are entitled to help from ACC.
Complaints
In September 2006, ACC implemented its Service Recovery approach, which placed responsibility
for the resolution of complaints directly with business units.
This reduced the number of complaints formally escalated to the Ofﬁ ce of the Complaints
Investigator, enabling faster resolution of such complaints. During 2006–2007, 77% of
complaints dealt with by the Ofﬁ ce were resolved within 15 days (target 50%) and 95% were
resolved within 30 days (target 95%).
The number of complaints lodged with the Privacy Commissioner and Ombudsman reduced by
10% and 18% respectively (targets 5%).
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Strategic priority 2:
Maintaining fair and stable levies
The sustainability of the fully funded Scheme depends on effective and efﬁ cient Scheme cost
forecasting, and collection of levies from everyone in New Zealand.
Key ACC activities in respect of this strategic priority are in areas such as:
• working relationships with levy payers
• pursuing levy stability
• increasing the uptake of existing and new products
• managing the large investment reserve
• achieving administrative efﬁ ciency.
Such activities will support the desired outcome that ACC levies are fair and stable.
Levy rates
The 2007–2008 levies for employers, self-employed, earners and motor vehicles were announced
in December 2006. The average levies (excluding GST) are set out below.
2007–2008
2006–2007
Employers
$1.21 per $100 of liable earnings
$1.21 per $100 of liable earnings
Self-employed
$3.36 per $100 of liable earnings
$3.54 per $100 of liable earnings
Earners
$1.16 per $100 of liable earnings
$1.16 per $100 of liable earnings
Motorists
$204.78 per motor vehicle
$190.00 per motor vehicle
The changes were within the target of no more than +/- 5%, with the exception of that for
motorists.
The average motorist’s levy increased by 8% (reversing the 8% decrease from 2005–2006 to
2006–2007). This increase has been driven by an increase in costs to the Motor Vehicle Account
of weekly compensation, social rehabilitation and medical treatment associated with serious
injuries on the road. This is in part offset by the forecast increase in motor vehicle registrations
and better-than-expected investment returns during 2005–2006.
Levy payer satisfaction
ACC measures the level of levy payer satisfaction by survey.
Satisfaction levels among the largest 500 employer levy payers and the next largest 2,000
increased slightly from 2005–2006 and exceeded the targets.
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Satisfaction levels decreased for small- and medium-sized employers. There was a signiﬁ cant
increase in contact with small- and medium-sized employers in the latter part of 2006–2007,
involving increased levies, referrals to debt collection agencies and updating of records, which is
likely to have had an impact on recorded satisfaction levels. ACC has implemented the following
initiatives that form part of a longer-term approach to improving the way ACC interacts with levy
payers:
• extra resources in the Business Service Centre to improve service delivery
• simpliﬁ ed levy invoices
• an outbound calling team to focus on proactive customer contacts to ensure data quality
and the removal of barriers to payment.
In early 2007, small- and medium-sized employers were surveyed, and 32% agreed that ACC
provides good value for money. ACC also completed research to understand what business
customers mean by good value for money, and what ACC can do to improve its value for money
rating. The research results indicate that business customers do not value an organisation they
know little about and, consequently, tend to undervalue the beneﬁ ts that ACC offers. ACC is
developing appropriate responses to the issues raised, which will become a focus for activity
throughout 2007–2008.
Customer satisfaction levels for self-employed remained at the higher level reported in
2005–2006.
2006–2007 satisfaction levels among tax agents increased and met the target.
2006–2007
2006–2007
2005–2006
Margin of
Levy payer group
Result
Target
Result
Sample size
error (+/-)
Top 2,500 employers
88%
N/A
86%
644
2.7%
Top 500 employers
85%
80%
84%
298
3.3%
Next 2,000
89%
85%
88%
346
4.0%
employers
Small- and medium-
70%
73%
75%
980
3.1%
sized employers
Self-employed
69%
N/A
69%
1,073
3.0%
Tax agents
75%
70%
70%
467
4.7%
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Investment management
The greater the return that ACC achieves on managing its investments, the less it will need to put
aside to cover future claim costs, thus reducing the amount of levies charged.
ACC was managing reserves of $7.9 billion at 30 June 2006 and aimed to achieve investment
returns which exceed market benchmarks by 0.5%. Investment returns during 2006–2007 for
ACC’s total reserves exceeded the benchmarks by 0.4% (compared with 2.7% in 2005–2006
and 1.2% per annum over the last three years). Detailed comment on investment performance is
included in the Investments section of the report.
Investment income for 2006–2007 was $819 million – $228 million in excess of the $591 million
budget (which was set based on an average of government bond yields and swap rates).
Administration costs
Achieving effective expenditure on administering the Scheme will reduce the amount of levies to
be charged.
2006–2007
2006–2007
2005–2006
Costs ratio
Result
Target
Result
Injury prevention costs/claim costs
1.6%
<1.9%
1.9%
Investment costs/investment assets
0.19%
<0.25%
0.16%
Levy collection costs/levy revenue
1.6%
<1.8%
1.6%
Operating costs/claim costs
11.8%
<13.6%
12.5%
Injury prevention costs relative to claim costs decreased from 1.9% to 1.6%. Injury prevention
costs were 8% below budget due to delays to several programmes but remained close to the
$40 million of the previous two years. Claim costs were 5% higher than budget, mainly due to
higher social rehabilitation and weekly compensation costs associated with increased claim
volumes.
Investment costs were 18% below budget due to reduced fees payable to external managers,
reﬂ ecting lower performance relative to the market and lower levels of investment placed with
overseas managers.
Collection costs as a percentage of levy revenue have decreased from 2.5% in 2001–2002 to
1.6% in 2006–2007. Levy collection costs were less than budget due to lower-than-expected
payments to external collection agencies; levy revenue was higher than expected due to higher-
than-forecast earnings from employment in 2006–2007 and increased revenue in respect of prior
years.
Operating costs (the majority of which relate to the management of claims) have remained
relatively constant at approximately 12% of claim costs. Operating costs were 9% below budget
due to:
• lower-than-expected staff numbers
• rescheduling of the public information campaign
• deferred expenditure associated with operating cost projects
• lower depreciation through rescheduling of the capital expenditure programme and
implementation of ACC’s new claims management system (‘Eos’).
18

Strategic priority 3:
People-focused with good outcomes
ACC is focused on people – that is, on injured people, levy payers, providers and other
stakeholders.
ACC is working to:
• empower staff to deliver customer-focused service
• move to a more integrated service for customers so that an individual needs only one point
of contact when seeking assistance on any ACC matter
• help staff make the transition from a culture of compliance to a culture of ﬂ exibility to better
meet the need of customers
• ensure that services and entitlements are delivered in a way that is appropriate for Ma¯ori
and minority groups.
Activity in these areas will support the achievement of the following outcomes:
• improved access to the Scheme
• improved rehabilitation outcomes, particularly for long-term claimants
• fewer escalated disputes.
Levy payer satisfaction has been reported under Strategic Priority 2.
Claimant satisfaction
ACC surveys the level of claimant satisfaction monthly. All claimant satisfaction levels improved
over those reported for 2005–2006. Target levels were achieved except those for Ma¯ori
claimants.
Overall ACC claimant satisfaction increased from 77% to 82%. In particular, the satisfaction levels
of long-term claimants increased from 73% to 79% – a 10% increase over the result when ﬁ rst
surveyed in 2002–2003.
Also of particular note is the improvement in satisfaction for Ma¯ori, Paciﬁ c and Asian claimants.
ACC is implementing three key initiatives to further improve the service provided to Ma¯ori
claimants:
• the development of new Kaiawhina roles, which are designed to provide support and to
help improve relationships between Ma¯ori claimants and ACC, as well as offering advice on
ACC matters to whanau and communities
• a new training course for ACC’s frontline staff, entitled ‘Cultural Conversations’, which
focuses on improving the way frontline staff communicate with claimants
• recruiting to reﬂ ect the communities ACC serves.
20

The satisfaction rate for seriously injured claimants increased further from 74% in 2005–2006 to
78%, compared with 66% when ﬁ rst surveyed in 2002–2003.
The percentage of claimants surveyed who reported as being either dissatisﬁ ed or very
dissatisﬁ ed decreased from 20% in the ﬁ nal quarter of 2005–2006 to 13% in the ﬁ nal quarter of
2006–2007. Quarterly results in 2006–2007 ranged from 16% to 13% (target 10–13%). The top
three reasons for claimant dissatisfaction were identiﬁ ed as:
• poor communication or contact
• service delays
• poor service from ACC staff.
The initiatives undertaken to address those issues included:
• tracking inbound and outbound calls to claimants and promoting proactive rehabilitation
and communication with claimants (addressing communication and timeliness)
• reviewing ACC’s forms, letters and fact sheets (addressing communication)
• implementing the Service Recovery framework (addressing interactions with staff and
communication)
• developing a staff capability strategy (addressing all three areas of concern).
Claimant satisfaction 2006–2007
2006–2007
2005–2006 Sample size
Margin of
by claimant group
Result
Target
Result
error (+/-)
Overall claimant
82%
N/A
77%
9,692
1.1%
satisfaction
Overall branch claimant
83%
N/A
78%
5,430
1.3%
satisfaction
Branch claimants –
87%
85%
83%
3,186
1.7%
duration under 52
weeks
Branch claimants –
79%
73%
73%
2,244
2.1%
duration over 52
weeks (long term)
Ma¯ori claimants
84%
85%
77%
690
3.8%
Paciﬁ c claimants
87%
85%
82%
145
8.3%
Asian claimants
85%
82%
78%
123
9.0%
Seriously injured
78%
70%
74%
91
10.4%
claimants

21

Provider satisfaction
ACC surveys the level of provider satisfaction annually. The 2006 ACC Provider Feedback Survey
(carried out in November and December 2006) reported that overall provider satisfaction with
ACC had remained steady at 70%.
Satisfaction amongst the two key provider groups was relatively high at 78% for those working in
general practice and 70% for those in physiotherapy (targets 75%).
The increase in satisfaction for general practitioners from 73% in 2005–2006 was offset by
a decrease from 75% for physiotherapists. That decrease is consistent with dissatisfaction
expressed in relation to the levels of payment by ACC for physiotherapy services and process
delays that existed at the time of the survey.
Issues resolution
The rate of complaints (relative to the number of active claims) escalated to the Ofﬁ ce of the
Complaints Investigator during 2006–2007 decreased by 44% (target 5%) compared with 2005–
2006. This is consistent with the new Service Recovery framework reported earlier.
The Claimant Support Service was established to handle concerns referred to them from the
ACC complaints telephone line. Some of these can be resolved by providing people with general
information about ACC, while others are referred to the appropriate business unit for resolution.
The Claimant Support Service resolved 76% of complaints (target 50%) within four working days.
ACC has undertaken a pilot to increase its focus on mediation (rather than review) as a means
of resolving disputes with claimants. The percentage of claim-related reviews lodged during the
period July 2006 to April 2007 that were subsequently settled by mediation was 2.3%, compared
with a target of 5%. ACC expects this to improve as the lessons learned from the evaluation of
pilot processes, and successful outcomes from mediation to date, are rolled out nationally.
22

Strategic priority 4:
Open and fair access for all New Zealanders
ACC will continue to identify and understand barriers to Scheme access, with particular focus on
populations with a demonstrable need. Ma¯ori, Paciﬁ c and Asian peoples have a clear claiming
disparity, as do people with English as a second language and people with impairments.
Key ACC activities in respect of this strategic priority are in areas such as:
• educating people on entitlements and injury prevention
• implementing ACC’s Ma¯ori Access Strategy
• developing Paciﬁ c and Asian Access Strategies.
Such activities will support the desired outcome that everyone in New Zealand will be able to
access ACC services and entitlements with equal ease.
The primary measure for this strategic priority is an increase in claim rates within groups,
particularly for groups with an identiﬁ ed claiming disparity.
New claims registered per 1,000
2006–2007
2005–2006
population
Actual
Actual
Increase
Target
Ma¯ori – under 20 years
286.0
274.1
4.3%
2.0%
Ma¯ori – over 60
191.1
171.2
11.7%
3.5%
Paciﬁ c peoples – aged 5–24
310.4
300.6
3.3%
1.5%
Paciﬁ c peoples – over 40
191.3
172.3
11.0%
1.5%
However, as the overall claim rates for all groups increased by 4%, there has been no signiﬁ cant
reduction in disparity for Ma¯ori aged under 20 and Paciﬁ c peoples aged 5–24. Research is being
developed to:
• ensure ACC understands the barriers to access for Ma¯ori, Paciﬁ c and Asian groups
• ensure ACC understands the groups it is targeting.
Disparity information will be used to support access initiatives including the Ma¯ori, Paciﬁ c and
Asian Access strategies.
An increase in new claim numbers by ethnic groups with a clear claiming disparity was also
sought. New claims registered in the Earners’ and Non-Earners’ Accounts (with ethnicity
identiﬁ ed) increased signiﬁ cantly for the groups, and to a greater extent than the 6.7% increase
recorded for the reference group (European claimants).
2006–2007
2005–2006
New claims registered
Actual
Actual
Increase
Target
Ma¯ori 144,358
134,914
7.0%
2.5%
Paciﬁ c peoples
74,150
68,708
7.9%
1.5%
Asian
57,088
49,893
14.4%
1.0%
23

A key element of ACC’s Access strategies involves ensuring Ma¯ori and Paciﬁ c peoples have the
best possible services and choices in treatment and rehabilitation. A target 1.5% increase in the
utilisation of specialist services by Ma¯ori and Paciﬁ c peoples was set – however, no results are
available yet.
24

Strategic priority 5:
Working to reduce injuries
and occupational diseases
ACC continues to strengthen its leadership role in the ﬁ eld of injury prevention, with
implementation of the New Zealand Injury Prevention Strategy (NZIPS) remaining a priority. ACC’s
injury prevention activity is aligned to meet the strategic goals of the NZIPS and the strategies led
by other agencies.
Particular areas of focus in 2006–2007 included:
• supporting the Department of Labour in the implementation of the New Zealand Workplace
Health and Safety Strategy
• strengthening community injury prevention capability
• undertaking research to gain a better understanding of occupational diseases.
Such activities will support the desired outcome of reductions in personal injuries, including
workplace gradual processes, diseases and infections.
New claims numbers
New claims are monitored in three main categories: new claims registered, new ‘weekly
compensation’ claims, and new ‘other entitlement’ claims (claims receiving entitlements other
than medical fees payments but not weekly compensation).
ACC monitors claim rates relative to appropriate population exposure bases. It was forecast that
the population would increase slightly, and that ACC’s activities promoting awareness of the
Scheme and addressing barriers to Scheme access for at-risk claimant groups would increase
new claim volumes. Motor vehicle claim rates are now reported relative to total population rather
than the vehicle usage (kilometres travelled) used in previous reports.
New claims registered
The following tables show the number of new claims registered in 2006–2007, and claim rates, in
total and by Account. The charts show a 12-month moving average of the number of new claims
registered by month since 2002, in total and by Account.
Overall, new claims registered increased by more than 5% from 2005–2006, which continued
the rate of increase reported in 2005–2006, and is signiﬁ cantly more than the increase in
population.
Compared with 2005–2006, claim numbers reduced in the Employers’ Account and the claim rate
decreased accordingly. The decrease in Self-Employed Work Account claim numbers was matched
by a decrease in the numbers of self-employed, resulting in little change to the claim rate.
25

The increased claim numbers in the Motor Vehicle, Non-Earners’ and Earners’ Accounts were
reﬂ ected in increased claim rates. The increases are consistent with ACC’s Scheme access
improvement initiatives.
2006–2007
2005–2006
New claims registered
Actual
Actual
Increase
ACC total
1,685,995
1,604,359
5%
Employers’ Account
167,222
170,108
-2%
Self-Employed Work Account
39,162
42,585
-8%
Residual Claims Account
2,225
857
160%
Motor Vehicle Account
44,130
43,161
2%
Non-Earners’ Account
817,198
782,561
4%
Earners’ Account
612,094
562,241
9%
Treatment Injury Account
3,964
2,846
39%
2006–2007
2005–2006
New claims registered per 100 population
Actual
Actual
ACC total
40.26
38.71
Employers’ Account
9.36
9.80
Self-Employed Work Account
11.54
11.63
Motor Vehicle Account
1.05
1.04
Non-Earners’ Account
39.61
38.33
Earners’ Account
28.79
26.74
Treatment Injury Account
0.09
0.07
26

New weekly compensation claims
The following tables show new weekly compensation claims in 2006–2007, and claim rates, in
total and by Account. The charts show a 12-month moving average of the number of new weekly
compensation claims by month since 2002, in total and by Account.
Total new weekly compensation claims in 2006–2007 increased by more than 5% from
2005–2006 – a similar increase to that reported in 2005–2006. The 2006–2007 claim rate of
1.627 per 100 population increased from 1.561 in 2005–2006 and was in excess of the 1.594
target.
The major growth in injuries is occurring around the home and while undertaking a sporting or
recreational activity.
The increased new claim numbers in the Motor Vehicle and Earners’ Accounts reﬂ ect increases
both in the new claims registered and, in respect of the Motor Vehicle Account, in the ‘escalation
rate’ (ie the proportion of new weekly compensation claims relative to the number of new claims
registered).
The number of new weekly compensation claims resulting from injuries in the workplace
(Employers’ and Self-Employed Work Accounts) decreased slightly.
2006–2007
2005–2006
New weekly compensation claims
Actual
Actual
Increase
ACC total
68,149
64,709
5%
Employers’ Account
19,202
19,333
-1%
Self-Employed Work Account
3,273
3,376
-3%
Residual Claims Account
467
459
2%
Motor Vehicle Account
4,288
4,112
4%
Non-Earners’ Account
563
355
59%
Earners’ Account
39,987
36,681
9%
Treatment Injury Account
369
393
-6%
27

2006–2007
2005–2006
New weekly compensation claims per 100 population
Actual
Actual
ACC total
1.627
1.561
Employers’ Account
1.075
1.113
Self-Employed Work Account
0.965
0.922
Motor Vehicle Account
0.102
0.099
Earners’ Account
1.881
1.744
Treatment Injury Account
0.009
0.009
New other entitlement claims
The following tables show the number of new other entitlement claims in 2006–2007, and claim
rates, in total and by Account. The charts show a 12-month moving average of the number of new
other entitlement claims by month since 2002, in total and by Account.
Total new other entitlement claims in 2006–2007 increased by more than 12% from 2005–2006.
The claim rate of 1.136 per 100 population increased from 1.022 in 2005–2006 and was in excess
of the 1.068 target.
28

The major growth in injuries is occurring around the home (both earners and non-earners) and
while undertaking a sporting or recreational activity.
The increased new claim numbers in the Earners’ and Non-Earners’ Accounts reﬂ ect increases
both in the new claims registered and in the ‘escalation rates’ (ie the proportion of new other
entitlement claims relative to the number of new claims registered).
2006–2007
2005–2006
New other entitlement claims
Actual
Actual
Increase
ACC total
47,556
42,373
12%
Employers’ Account
5,207
5,350
-3%
Self-Employed Work Account
1,497
1,530
-2%
Residual Claims Account
1,916
1,555
23%
Motor Vehicle Account
1,654
1,443
15%
Non-Earners’ Account
24,860
21,998
13%
Earners’ Account
11,668
10,172
15%
Treatment Injury Account
754
325
132%
2006–2007
2005–2006
New other entitlement claims per 100 population
Actual
Actual
ACC total
1.136
1.022
Employers’ Account
0.291
0.308
Self-Employed Work Account
0.441
0.418
Motor Vehicle Account
0.039
0.035
Non-Earners’ Account
1.205
1.077
Earners’ Account
0.549
0.484
Treatment Injury Account
0.018
0.008
29

Injury prevention programmes
ACC placed particular focus on achieving reductions in the number of injuries in four areas:
• Safer industries – the rate of workplace entitlement claims reduced by 8.3% (target 0.5%
reduction) in the six priority industry sectors (agriculture, construction, health, forestry,
meat and road freight).
• Road – nationally, the rate of road injuries increased by 0.2% (target 0.5% reduction).
However, in six target geographic areas where ACC focused its road injury prevention
programmes, there was an 8% reduction in new motor vehicle entitlement claims. The
national road toll results are decreasing, but serious road injuries are increasing and, as a
result, road crashes remain a key issue for ACC and New Zealand. The National Road Safety
Committee has undertaken a review of the priority areas. The objectives of the review
are to:
– achieve better collaboration between key agencies
– reprioritise to ensure that serious injuries from road crashes are a key focus
– ensure that, collectively, the agencies play a stronger role in the road sector throughout
2007–2008.
• Recreation – rugby had a 5.5% decrease in the rate of entitlement claims and soccer had
a 2.5% decrease in the rate of entitlement claims (targets 4% decrease). During the year
there was a higher-than-expected number of new soccer claims arising from prior periods.
• Falls – the rate of injuries to adults aged 80 and over resulting from falls decreased by
0.3% (result to May 2007, target 0.4% decrease). ACC has not yet achieved the desired
geographical reach for its older adult falls prevention programmes, but this is expected to
be achieved early in the 2007–2008 year.
30

Awareness and reporting of occupational diseases
ACC surveyed the general public and treatment providers to establish current levels of awareness
of occupational diseases and ACC’s role in providing cover and entitlements.
Treatment providers were also surveyed as to their levels of knowledge in respect of the top
ﬁ ve occupational diseases (hearing loss, dermatitis, asbestosis, occupational asthma and
leptospirosis). The results highlight the need to provide better information on occupational
diseases to practitioners.
As a result, ACC is developing a communications strategy to raise awareness of occupational
diseases and other work-related conditions by targeting employer and employee representatives,
medical professionals and claimants. The communications will also concentrate on preventing,
identifying, diagnosing and treating occupational diseases and work-related conditions.
The results of the surveys will provide baseline data to establish performance targets for
increasing awareness and reducing the incidence of occupational diseases in 2007–2008.
National Safety Culture Survey
New Zealand Injury Prevention Strategy (NZIPS) commissioned research in late 2006 to undertake
a national, population-based safety culture survey. The National Safety Culture survey was
conducted in May 2007 and involved a population base of 1,000 with over-representation for
groups such as young males, Ma¯ori, Paciﬁ c Island and Asian populations.
The Strategy’s 2005–2008 implementation plan includes an impact measure of seeking a 10%
increase in awareness of the three key measures:
• everyone is at the risk of injury and harm (baseline measure 29%)
• consequences of injury and harm are far reaching (baseline measure 80%)
• accidents and injuries are preventable (baseline measure 53%).
Further surveys will be conducted bi-annually to measure changes from the baseline. The initial
ﬁ ndings indicate that people are underestimating their risk in the home, workplace, and sport
and recreation areas while overestimating their risk on the road.
31

Strategic priority 6:
Efﬁ cient, sustainable and ﬂ exible
organisation
ACC is positioning itself for the future by moving towards a more customer-focused, innovative
and staff-empowered environment.
It is keen to attract and retain highly skilled staff who will enhance the organisation’s capacity to
adapt rapidly to change and deliver consistently excellent service.
ACC aims to be recognised as a top-performing agency achieving the highest standards of
efﬁ ciency and customer service.
Staff satisfaction
ACC measures staff satisfaction by an annual staff census survey.
ACC’s 70.4% overall staff satisfaction rating at June 2007 compares with 72.2% in 2006 and is
below the 75% target. The satisfaction of ACC staff with their managers is 73.8% – also less than
the 2006 result of 75.2% and the target of 77.5%.
The decreases are thought to reﬂ ect, in part, the signiﬁ cant organisational and business systems
changes undertaken during the year.
New leadership programmes focusing on developing managers and the leadership in ACC are
commencing in the ﬁ rst quarter of 2007–2008.
Key results from the 2007 census are:
Census factor
2007 Result
2007 Target
2006 Result
Satisfaction with job
68.9%
N/A
70.4%
Satisfaction with manager
73.8%
77.5%
75.2%
Being part of the future of ACC
69.7%
N/A
71.3%
Satisfaction with ACC
69.8%
N/A
71.9%
Staff satisfaction index
70.4%
75.0%
72.2%

32

Staff attrition
Turnover through voluntary termination for all ACC staff during the 12 months to June 2007 was
15.5%. This is slightly in excess of the target range of 10–15% and compares with turnover during
2005–2006 of 15.5% (recalculated from the reported 14.8%).
ACC is undertaking a review of its recruitment strategy, enhancing induction and introducing a
leadership and management development programme. It is anticipated that these initiatives will
help increase staff retention in 2007-2008.
Efﬁ ciency
Administration costs per claim are determined from analysis of ACC’s operating costs (the
majority of which relate to claims management activity). Targets were based on budget operating
costs and forecast claim numbers.
33

Costs per claim were within target as operating costs were 9% less than budget and entitlement
claim numbers were higher than forecast. Claims management costs per entitlement claim are
increasing. Costs are increasing (due to more staff managing claims and the commencement of
Eos depreciation) at a faster rate than claim numbers.
Administration costs per claim
2006–2007
2006–2007
2005–2006
Actual
Target
Actual
Entitlement claims
$1,270
$1,440
$1,258
Medical fees only claims
$24.5
$28.3
$25.0
Budget control
Actual ($m)
Budget ($m)
Variance
Levy revenue
3,290.3
2,952.2
11%
Investment income
819.3
591.1
39%
Claim costs
2,428.1
2,310.5
-5%
Administration costs
396.5
431.9
8%
Claims liability
13,735.4
13,388.5
-3%
ACC’s target was for the above ﬁ nancial results to be within +/- 2% of budgets.
Levy revenue was $338 million in excess of budget due to higher-than-forecast earnings from
employment in 2006–2007 and higher-than-expected revenue from ﬁ nal invoices in respect of
prior years for the Employers’, Residual Claims and Earners’ Accounts.
Investment income exceeded budget by $228 million due to strong returns in all equity markets.
Claim costs (treatment, social and vocational rehabilitation, and compensation entitlements
prescribed by the Act for claimants) paid during 2006-2007, exceeded budget by $118 million due
to higher social rehabilitation and weekly compensation costs associated with increased claim
volumes.
ACC’s administration costs were less than budget for 2006–2007, primarily as a result of:
• deferred commencement of injury prevention programmes
• lower depreciation through rescheduling of the capital expenditure programme and
implementation of Eos
• reduced fees payable to external investment managers, reﬂ ecting lower performance
relative to the market and lower levels of investment placed with overseas managers.
ACC’s claims liability increased by $1.020 billion from $12.715 billion at 30 June 2006 to
$13.735 billion at 30 June 2007. This is 3% higher than the forecast liability of $13.389 billion.
The increase in the discount rate from 5.83% at 30 June 2006 to 6.61% at 30 June 2007
reduced the liability by approximately $1.1 billion. This reduction was more than offset by the
liability increasing signiﬁ cantly as a consequence of providing for higher future medical, social
rehabilitation and weekly compensation costs.
34

Continuous improvement
Since 2000, ACC has operated an organisation-wide business excellence programme based on
the international Baldrige best business practice framework.
An internal assessment was conducted against the Baldrige framework in February 2007. As a
consequence, ACC has been assessed at 501 points (within its target range of 500–550 points).
This represents a small slippage from the 2006 assessment of 532 points, less than was
anticipated given the organisation’s restructure. The review indicates that ACC has maintained a
similar level of business maturity over the past two years.
Many of the opportunities for improvement identiﬁ ed within this self-assessment were already
being addressed by ACC. Other opportunities for improvement, not currently being addressed but
aligned to current business direction, have been accepted and are now being integrated into the
2007–2008 business planning as a reﬂ ection of ACC’s focus on continuously improving services.
A safe workplace
ACC’s commitment to managing workplace health and safety is reﬂ ected in its attainment of
tertiary-level accreditation for the ACC Partnership Programme in 2006–2007.
ACC’s WorkSafe health and safety programme is in place in all workplaces to support the
physical, psychological and emotional safety of staff.
ACC continues to provide an Employee Assistance Programme, which has enabled support to
be available to all ACC staff members to assist them to balance work and personal lives and to
enable provision of support to assist with the resolution of any issues that might be impacting on
performance at work.
As part of ACC’s WorkSafe programme, all staff who work closely with claimants have
professional supervision to provide support and ensure that case management and other work
practices are safe, effective and ethical.
ACC provides an effective staff claims management function, ensuring staff members suffering
injury are able to return to a productive life as soon as possible using the case management
approach.
35

Best Places to Work
In the Best Places to Work Survey 2006, ACC ranked ninth-equal out of 14 organisations in the
large employers category (400+ employees).
ACC recorded lower than average results compared to other organisations participating in the
Best Places to Work Survey 2006 in the areas of Culture and Values, Communication and Co-
operation, My Job, and Performance and Recognition. ACC will address these issues in 2007–
2008 by:
• implementing a capability development strategy to improve the competencies and culture
of its staff
• reviewing the system by which staff performance is reviewed
• tailoring staff development plans to individual needs.
36

Strategic priority 7:
Rehabilitation focused on returning to
productive life
ACC is committed to improving sustainable rehabilitation outcomes for all claimants, particularly
for long-term claimants where their health, independence and participation need to be restored
to the maximum extent practicable. To this end, ACC aims to become involved in a claimant’s
rehabilitation as early as possible and to work in partnership with claimants and their families.
ACC will work to ensure prompt delivery of treatment or other entitlements to improve an injured
person’s recovery.
Rehabilitation rates
Rehabilitation rates show the percentages of claimants who return to work or independence
within three-month, six-month and 12-month periods from date of injury, for the major weekly
compensation accounts. The 12-month rate is particularly important, as it determines the number
of claims that become classiﬁ ed as long-term.
Rehabilitation rates deteriorated from 2005–2006, particularly at three and six months. However,
the target rates (82% at six months and 90% at 12 months for ACC in total) were met – the targets
having taken into account the expected impact of the system change process on rehabilitation
performance. Performance was also affected by the increase in the volume of new claims.
2006–2007
2005–2006
Three-month rehabilitation rates
Result
Result
ACC total
65%
66%
Employers’ Account
67%
68%
Self-Employed Work Account
56%
56%
Motor Vehicle Account
58%
58%
Earners’ Account
66%
68%
Six-month rehabilitation rates
ACC total
83%
84%
Employers’ Account
83%
83%
Self-Employed Work Account
76%
77%
Motor Vehicle Account
79%
79%
Earners’ Account
85%
86%
12-month rehabilitation rates
ACC total
92%
93%
Employers’ Account
91%
92%
Self-Employed Work Account
88%
90%
Motor Vehicle Account
89%
88%
Earners’ Account
94%
94%
37

Rehabilitation index
ACC trialled the use of a rehabilitation index. This is a matrix measure designed to track how
ACC’s service delivery components work together to achieve rehabilitation outcomes. The index
consists of eight components, with the 2006–2007 target of 100 reﬂ ecting the performance
target for each of the components.
The result for 2006–2007 of 88 can be mainly attributed to the following components of
the index:
• an increase in the number of active long-term other entitlement claims
• a decrease in the percentage of claims that are rehabilitated within the maximum duration
benchmark of the Medical Disability Advisor (MDA). The MDA provides guidelines for the
timeframe to rehabilitate a person’s injury
• a decrease in the proportion of claims rehabilitated within 28 weekly compensation
days paid.
The increased workload for claims management staff resulting from increased new claims
volumes coupled with the transition to the new Eos claims management system contributed to
the decline in results.
The trial of the rehabilitation index highlighted that it was an overly complex performance
measurement mechanism. Staff found the index difﬁ cult to understand and consequently, it did
not achieve the desired impact as a performance driver. ACC will in future report against the key
elements of the matrix as separate performance measures.
Number of long-term claims
ACC forecast that the number of long-term weekly compensation claims (ie claims in receipt of
weekly compensation for more than 12 months) would increase by 425 during 2006–2007. The
number of claims increased by 580 during the year to 30 June 2007.
The increase reﬂ ects increases in:
• the number of new weekly compensation claims during 2005–2006
• the proportion of such claims reaching 12 months’ duration on the Scheme compared with
recent years (consistent with the deterioration in 12-month rehabilitation rates).
39

Number of long-
Number of long-
term claims at
term claims at
Increase/
Account
30 June 2007
30 June 2006
(Decrease)
ACC total
13,928
13,348
580
Employers’ Account
2,140
1,741
399
Self-Employed Work Account
454
384
70
Residual Claims Account
4,248
4,655
(407)
Motor Vehicle Account
3,085
3,007
78
Non-Earners’ Account
339
313
26
Earners’ Account
3,352
2,945
407
Treatment Injury Account
310
303
7
Return-to-work outcomes survey
ACC uses a survey to measure the return-to-work outcomes for a sample of former claimants
(approximately 400) who had a claim with ACC and were off work for at least three months as
a result of their injury. From this sample, approximately 200 claimants who indicated they had
returned to work are re-interviewed in 12 months to examine whether their return to work was
sustainable.
When surveyed in late 2006, the proportion of former claimants surveyed who had returned to
employment was 85% (84% in 2005), which is above the target set for this measure of 75%–80%.
Ninety-one per cent of those surveyed in 2006, who had reported in 2005 that they had returned
to work, reported that they were still working 12 months later (the equivalent result in 2005
was 85%).
40

Analysis of revenue and expense by activity
ACC’s principal business activities are:
• Claim management
– lodgement of new claims and cover decisions
– determination, processing, payment and monitoring of fees payable to treatment and
service providers and claimants
– returning claimants to independence
• Injury prevention
– development and delivery of programmes to reduce the incidence of accidents and
injury.
• Investment management
– management of ACC’s investment assets
• Levy collection
– invoicing and collection of levies.
The combination of those business activities and associated support activity produce the outputs
and achievements detailed above in relation to the seven strategic priorities.
2006–2007 revenue and expenses by activity were as follows ($million):
Revenue
Administration costs
Claim costs
Actual
Budget
Actual
Budget
Actual
Budget
Claim management
122.4
119.5
2,106.0
1,967.9
Injury prevention
40.0
43.3
Investment management
819.3
591.1
17.6
21.4
Levy collection
2,516.4
2,224.7
52.6
54.0
ACC business activity
3,335.7
2,815.8
232.6
238.2
2,106.0
1,967.9
ACC support activity
1.3
0.9
163.8
194.6
322.1
342.6
Catalyst, DRSL services to
3.3
3.8
1.4
2.6
non-ACC customers
Non-earners’ appropriation
773.8
727.6
ACC Group Total
4,114.1
3,548.1
397.8
435.4
2,428.1
2,310.5
41

Part Three
Levies, Investments and Claims Liability
Levies
Levy setting
The Scheme Accounts are funded by the collection of levies. Levy rates are set annually to meet
the funding policies of each Account. The Residual Claims Account and the residual portions of
the Motor Vehicle and Earners’ Accounts are required by governing legislation to be fully funded
by 30 June 2014. The Work, Motor Vehicle and Earners’ Accounts are required to be fully funded
on an ongoing basis, with levy rates adjusted over a three-year period to account for any over- or
under-funding.
All claims incurred from 1 July 2001 in the Non-Earners’ Account are fully funded by appropriation
from Government and all pre-1 July 2001 claims are funded on a pay-as-you-go basis by
appropriation from Government.
The Treatment Injury Account is funded from the Earners’ and Non-Earners’ Accounts according to
the mix of earner and non-earner claimants.
Full funding means sufﬁ cient reserves are available to meet the life-time costs, including
management, of all registered claims as well as the life-time costs of all claims that have been
incurred but not yet reported to ACC.
Levies for the Residual Claims, Work and Earners’ Accounts are paid at the applicable rate applied
to the liable earnings of the levy payer.
Motor Vehicle levies are paid by vehicle owners with their annual licence fee and with a portion of
the revenue included in the cost of petrol.
Levy collection
Levies required to fund the Residual Claims and Work Accounts are invoiced directly to the
employer or self-employed person based on their respective liable earnings at the applicable levy
rate. Earner levies of shareholder-employees and self-employed are also invoiced directly. Earner
levies of employee earners are collected within the PAYE taxation system and are paid to ACC by
the Inland Revenue Department.
43

Motor vehicle levies are included within vehicle licence fees and, for petrol-powered vehicles, a
levy component is included within the cost of petrol. These are collected and paid over by Land
Transport New Zealand and Customs.
2006–2007 levy
The Employers’ and Self-Employed Work Accounts were merged with effect from 1 April 2007 to
form the Work Account. The comments below for the Employers’ and Self-Employed Accounts are
for the nine months to 31 March, and for the Work Account are for the three months to 30 June.
Levy revenue exceeded budget in the Residual Claims, Employers’, Self-Employed Work and
Earners’ Accounts due to:
• liable earnings exceeding expectation
• positive adjustments to prior years’ revenue as ﬁ nal invoices issued for those years
exceeded expectations.
Levy revenue was lower than budget in the Work Account, reﬂ ecting the lower levy rates that were
set with effect from 1 April 2007, compared with the rates that were in effect when the budget was
prepared.
Levy revenue for the Motor Vehicle Account exceeded revenue budget from both vehicle licence
fees and petrol levy due to more vehicle licences and higher demand for petrol than anticipated
in the budget.
Non-Earners’ appropriation
Appropriation from Government exceeded budget by $45.6 million (6.8%) mainly due to:
• a $37.3 million increase reﬂ ecting
– an increase in lump-sum costs following a Court of Appeal decision in the Estate of
Priddle and Others v ACC case relating to work-related gradual process, disease and
infection claims
– a Crown Law opinion stating that costs associated with gradual process hearing loss
claims incurred before 1 July 2005 are to be reimbursed from the Non-Earners’ Account,
as these claimants were non-earners on their deemed date of injury. The costs of these
claims were transferred from the Employers’ and Self-Employed Work Accounts.
• a funding adjustment reﬂ ecting actual costs incurred and a change in the claims liability
valuation.
The appropriation allocated to the Treatment Injury Account exceeded budget by $0.7 million
(1.3%).
44

Investments
Why ACC invests
There can be a signiﬁ cant time gap between the collection of levies and the payment of all costs
that those levies are intended to cover. Many injuries require ongoing rehabilitation, medical care
or earnings replacement for several years or decades after the injury is incurred. Accordingly, the
funds set aside to cover the future costs of injuries that have already occurred will be invested for
an average of about 10 years before they are needed. In the meantime, ACC invests those funds
with an expectation that it will earn a return on its investments which is signiﬁ cantly better than
inﬂ ation. This reduces the amount of money that ACC needs to put aside to cover future costs and
thus the amount of levies charged.
Risks
By assuming that it will earn a return on its investments, ACC is left exposed to the risks that
long-term returns could be lower than expected or that higher-than-expected inﬂ ation in claim
costs could mean that the budgeted return may prove to be insufﬁ cient to fund existing claims.
The investment portfolios are managed in a way which maximises the probability that ACC will be
able to meet its long-term obligations without having to make unplanned increases in levy rates.
In addition to managing the risks that can impact short-term investment returns (such as declines
in equity markets), ACC must also protect itself against the risk that prospective long-term real
returns may decline (due to declines in interest rates or rises in inﬂ ation). ACC also needs to
balance the objective of reducing its exposure to these risks against the equally important
objective of enhancing portfolio returns.
While ACC’s conceptual focus is on long-term risks, it is also important to quantify and measure
risk over a shorter time period. In the near term, ACC’s long-term risks can be linked to two
shorter term measures:
• risk that ACC might fail to earn the assumed investment return in a given year. This would
be most likely to occur in years when equity markets are weak
• risk that ACC may need to increase the amount of money that needs to be put aside to
meet the future costs of existing claims. This could occur due to declines in bond yields,
deterioration in the inﬂ ation outlook, or other factors which are more speciﬁ c to ACC.
Either of these events could create a shortfall that ACC would have to cover by charging higher
levies in the future. Conversely, ACC would beneﬁ t – and might therefore be able to reduce
levy rates in the future – if it earns a higher-than-expected investment return, if it is able to
realistically increase its assumption about future investment returns or if the inﬂ ation outlook
improves.
45

Allocation of funds
ACC’s allocation of funds among different investment markets aims to balance the often
competing objectives of enhancing returns and reducing the funding accounts’ exposure to the
various risks discussed in the preceding section.
While it is not possible to fully offset the various long-term risks, ACC allocates funds among
investment markets and sets investment policy with an aim of keeping each of these risks at a
manageable level.
Compared to other funds, ACC tends to invest a relatively large percentage of its funds in
New Zealand investment markets, particularly ﬁ xed interest instruments with a long time to
maturity. There are two main reasons for this: ﬁ rstly, New Zealand investment markets match
ACC’s claims liabilities better than offshore markets, as ACC’s claims liabilities are sensitive to
real New Zealand bond yields; secondly, the internal management costs of ACC’s New Zealand
investments are much lower than the external management costs for offshore investments.
Each of ACC’s funding accounts splits its investment funds between an investment in ACC’s
short-term ‘cash portfolio’ which is used to meet near-term expenditure requirements, and
its own longer-term ‘reserves portfolio’, which is set aside to meet the future costs of existing
claims. The investment allocations of the reserves portfolios differ by funding account, reﬂ ecting
different funding positions, different projected growth rates, and different claims liability
characteristics of the various funding accounts. Generally, rapidly growing funding accounts have
higher equity weights than funding accounts which are not expected to record rapid growth in
investment assets.
An overview of the past year
The most notable features of investment markets over the past year have been the strength of
the New Zealand dollar, the rise in New Zealand interest rates and continued strong returns from
equity markets.
During 2006–2007, the New Zealand dollar rose by 37% against the Japanese yen, 27% against
the US dollar, 20% against the Euro and by more than 10% against all other currencies in which
46

ACC had a signiﬁ cant investment. This had the effect of signiﬁ cantly diminishing returns from
unhedged foreign investments.
New Zealand long-term interest rates rose by about 1% during 2006–2007. This severely
diminished the returns from ﬁ xed interest investments, but enhances the prospective return that
can be anticipated from these investments in the future.
Most equity markets have been very strong over the past year. However, New Zealand dollar
returns from the three largest offshore equity markets (US, UK and Japan) were all ﬂ at or
negative, as the strength of the New Zealand dollar more than offset the local currency returns
from those markets.
Growth in ACC’s investment portfolios
ACC’s reserves portfolios increased in value by 16% – from $7.9 billion last year to $9.2 billion at
the end of June 2007. Most of this growth was due to retained investment income, but ACC also
added extra funds from the surplus of levy income over Scheme expenditure.
The reason ACC is running an operating surplus is to grow the investment portfolio until it has
sufﬁ cient funds to cover the claims liability, which represents the estimated future costs of
injuries that have already been incurred. Once this has been achieved, ACC will be ‘fully funded’.
By continuing to re-invest investment income and maintaining a surplus of levy income over
Scheme expenditure, ACC will grow its long-term investment portfolios to meet our obligation to
be fully funded in seven years (by 2014). At the same time, the claims liability is projected to grow
roughly in line with growth in the size of the New Zealand economy. As a result, it is expected that
ACC’s long-term investment funds will roughly double by 2014.
How our investment portfolios are managed
ACC’s internal investment unit directly manages almost all of ACC’s investment in New Zealand
investment markets, and slightly over half of ACC’s investments in Australia.
Management of most foreign assets is outsourced to external fund-management companies. The
reason for this is that ACC has not had the resources to successfully monitor the thousands of
companies and markets that make up the global investment opportunity.
ACC has been measuring the performance of its investment portfolios on a market-value basis
for 15 years and, in 14 of those ﬁ nancial years, ACC out-performed its benchmark indices in both
New Zealand bonds and New Zealand equities.
47

Investment returns for the 2006–2007 year
ACC’s reserves portfolios returned an average of 9.5% over the year.
This return was in excess of budget, which should not be surprising given the strength of equity
markets during the year. The return was an average of 0.4% higher than the return from the
composite benchmark indices used to measure the performance of each funding account’s
reserves portfolio.
Due to the way in which investment portfolios are managed against a deﬁ ned claims liability, ACC
typically has a higher allocation to long-term New Zealand-dollar ﬁ xed interest markets and a
lower allocation to offshore equity markets compared with portfolios that are not being managed
with the objective of covering a deﬁ ned claims liability.
48

Other fund managers typically invest the majority of their funds in equity markets, whereas ACC
typically invests the majority of its funds in ﬁ xed interest markets. This means ACC’s overall
reserves portfolios will struggle to match the returns of other fund managers when equity
markets are strong and New Zealand bond yields have increased, as has been the case over the
past year. For this reason, ACC’s 9.5% return was lower than the average return achieved by other
fund managers during 2006–2007.
The positive performance of the reserves portfolios compared with ACC’s benchmarks was
due to the better-than-benchmark performance achieved within most of ACC’s various equity and
bond portfolios, offset in large part by the negative effect of ACC’s decision to maintain a higher-
than-normal level of exposure to unhedged foreign currency.
ACC’s New Zealand equity portfolio out-performed its benchmark index by 2.1%.
A large shareholding in Air New Zealand signiﬁ cantly aided performance, accounting for more
than half of the portfolio’s out-performance.
ACC’s $4.1 billion New Zealand bond portfolio out-performed its benchmark index by 0.6%.
The yields on highly rated non-government bonds have exceeded the yields on government
bonds by an unusually high margin over the past two years, and ACC has responded to this by
moving an increasing proportion of its bond portfolio into non-government bonds. Although the
spread between these two yields has remained high, the relative performance of ACC’s bond
portfolio beneﬁ ted from the higher yield that it earned on the non-government investments.
ACC’s New Zealand ﬁ xed interest portfolios have never incurred losses due to credit defaults in
the last 15 years.
Other key asset classes are Australian equities and global developed market equities. The table
(page 50) shows under-performance in each of these asset classes. However, ACC’s decision
to maintain a higher-than-normal level of unhedged foreign currency exposure has detracted
from the returns shown in the table, and the performance of the underlying portfolios was
generally ahead of benchmark. For the second year in a row, Independent Asset Management (of
Sydney) achieved a spectacular out-performance in a portfolio of resource sector equities that it
manages for ACC, achieving a return of 72% compared to a benchmark return of 25%.
49

Annual Portfolio Returns

This Year
Average Last 3 Years
$
million
Portfolio
Benchmark
Portfolio
Benchmark
By Asset Class:

Cash Portfolio
443
7.8%
7.9%
7.4%
7.4%
Reserves:
Reserves Cash
179
7.8%
7.9%
7.3%
7.4%
NZ Index Linked Bonds
448
2.5%
2.5%
6.7%
6.7%
NZ Bonds
4,089
0.7%
0.1%
5.3%
4.9%
NZ Equity
1,132
21.2%
19.0%
19.0%
17.7%
NZ Property
113
22.5%
21.7%
21.7%
20.7%
NZ Private Equity
57
4.4%
-5.6%
Australian Equity
982
38.2%
33.8%
34.0%
29.7%
Overseas Bonds
266
8.0%
7.3%
8.6%
8.0%
Overseas Equity – Developed
1,817
7.4%
11.3%
16.3%
13.7%
Overseas Equity – Emerging
98
21.2%
14.9%
33.1%
29.9%
Total Reserves
9,181
9.5%
9.1%
12.8%
11.6%

By Funding Account:
Earners’
2,786
8.0%
7.5%
11.6%
10.5%
Residual Claims
649
9.0%
8.5%
12.0%
10.9%
Motor Vehicle
2,384
10.9%
10.5%
13.6%
12.4%
Employers’
1,684
8.9%
8.6%
13.4%
11.9%
Self-Employed Work
294
10.3%
9.5%
14.6%
12.8%
Non-Earners’
879
11.1%
10.9%
13.7%
12.5%
Treatment Injury
505
11.3%
10.9%
13.8%
12.5%
Total Reserves
9,181
9.5%
9.1%
12.8%
11.6%
ACC prefers to hold an exposure to unhedged foreign currency which is lower than the value of
its investments in offshore markets. Accordingly, it uses foreign exchange hedges to offset a
portion of the foreign exchange exposures inherent in its offshore investments. The investment
committee of ACC’s Board agrees a neutral level of foreign exchange exposure, but ACC may vary
the actual level of foreign exposure in a range around this neutral level. For the past two years,
ACC has chosen to maintain a signiﬁ cantly higher-than-neutral level of exposure to unhedged
foreign currency, reﬂ ecting a view that the New Zealand dollar is over-valued and would
ultimately correct to more normal levels. This foreign exchange positioning beneﬁ ted ACC’s
returns in 2005–2006, but has signiﬁ cantly detracted from returns in 2006–2007. The net cost
to ACC from the rise in the New Zealand dollar over 2006-2007 has been approximately $262
million, comprised of $489 million of foreign exchange losses on ACC’s offshore investments
minus gains of $227 million on foreign exchange hedging contracts.
ACC has a policy of conducting investment activities in an ethical manner, which avoids prejudice
to New Zealand’s reputation as a responsible member of the world community. In particular,
ACC aims to ensure its purchase and sale of investments are transacted in an ethical manner, its
funds are not invested in activities repugnant to the laws of New Zealand or regarded as unethical
50

by a vast majority of the New Zealand public, and ensure it does not cast proxy votes in favour of
such activities. ACC has also resolved to avoid investing in companies whose primary business is
to produce, sell or distribute tobacco products.
Although ACC has consistently managed to achieve positive returns in each ﬁ nancial year, despite
a wide range of market conditions, it is important that stakeholders understand that there is
always a risk that negative returns could be reported over a single ﬁ nancial year. We calculate
that there is about a one-in-ﬁ ve chance that ACC will record negative reserves portfolio returns in
any single ﬁ nancial year.
Two primary factors contribute to the risk of negative returns:
• a rise in bond yields of about 1% could result in ACC recording negative investment returns.
However, ACC’s overall funding position would improve as a result of a decline in bond
yields, as our claims liability would decrease by an even greater amount than the decline in
investment income
• based on current policy, ACC’s funding accounts will typically have an average of 44% of
their reserves funds invested in equity markets. This means that a generalised decline in
foreign and domestic equity markets of around 10% or more would tend to result in ACC
recording negative overall investment returns.
Generally, ACC’s investments in individual companies or securities are too small to signiﬁ cantly
endanger total investment returns in a single ﬁ nancial year. ACC holds only two equity
investments of more than $100 million (see table).
The only credit exposures of more than $200 million are to the New Zealand Government and
some major New Zealand banks.
51

50 Largest equity investments as at 30 June 2007
Company
$ Million
Telecom
156.01
Fletcher Building
126.30
Contact Energy
62.49
Air New Zealand
58.12
Guinness Peat
57.75
BHP Billiton
50.60
Mainfreight
46.29
Sky City Entertainment
46.05
Fisher & Paykel Healthcare
44.55
ANZ Banking Group
42.28
Templeton Emerging Markets Investment Trust
41.85
Sky Network TV
41.63
Kiwi Income Property Trust
40.06
National Australia Bank
36.39
Commonwealth Bank of Australia
34.75
AMP NZ Ofﬁ ce Trust
29.17
Nuplex
29.09
Westpac Banking Corporation
28.80
Infratil
24.20
Woolworths
23.26
Auckland International Airport
23.05
QBE Insurance
22.98
Fisher & Paykel Appliances
22.33
CSL
21.44
Total S.A.
20.98
E.ON
20.54
Telstra
20.06
Vodafone Group
19.71
Goodman Property Trust
19.59
BG Group
18.12
Murchison Metals
17.93
Westﬁ eld Group
17.78
Lihir Gold
17.62
Banco Santander Central Hispano
17.24
Toyota Motor Corporation
16.92
AMP
16.77
Sally Malay Mining
16.69
New Zealand Oil and Gas
15.88
Beach Petroleum
15.41
Riversdale Mining
14.90
JP Morgan Emerging Markets Investment Trust
14.82
Sunshine Gas
14.69
Nestlé
14.61
Millennium and Copthorne Hotels NZ
14.48
Suncorp-Metway
14.40
Australian Worldwide Exploration
14.01
Pyne Gould Corporation
13.99
Exxon Mobil Corporation
13.98
Royal Dutch Shell
13.86
The Royal Bank Of Scotland
13.41
52

Claims liability
ACC claims liability
ACC has a responsibility to provide for the rehabilitation and compensation of people in New
Zealand who have injuries. To do this ACC needs to hold assets at least equal to the expected
future cost of providing these beneﬁ ts.
Each year an estimate is made of the expected total discounted amount of the future claims
payments in respect of injuries occurring before the end of the ﬁ nancial year. This is the ACC
claims liability. The claims payments are discounted to reﬂ ect the present value of future
payments.
The claims liability is subject to uncertainty both in the amounts of future claim payments and
their timing. This makes the claims liability different from the liabilities found in other (non-
insurance) company balance sheets. Despite the uncertainty, the claims liability estimate shown
in these accounts does not contain margins and it is not based on conservative or optimistic
assumptions.
Estimate
The claims liability is based on future events whose outcomes cannot be known with certainty.
The key sources of this uncertainty are as follows:
• the total number of injuries that have arisen before the end of the ﬁ nancial year. It may take
months, or even years, for an injury to manifest. If the injured party is not aware that they
can receive support from ACC there may be further delays in claims being reported to ACC.
Therefore, the number of claims likely to be reported in the future in respect of injuries that
occurred in the past need to be estimated
• the outstanding costs of claims that have already been reported. For claims that are still
open the expected future costs of rehabilitating and compensating the individuals involved
needs to be estimated. As no one recovers from an injury the same way these estimates
may vary. Closed claims may re-open and the costs of these eventualities need to be
estimated
• the types and costs of treatments may change in the future. Advances in medicine and
treatment processes may result in increased costs in the short term. However, this may also
lead to shorter rehabilitation times, thus reducing costs in the longer term
• economic conditions affect future claim payments. Inﬂ ation has an impact on the estimated
costs of future claim payments. Economic growth and unemployment levels can inﬂ uence
the propensity to lodge claims with ACC and the attitudes of injured people towards
rehabilitation
• ACC legislation is always under review and court cases can result in entitlements that were
not anticipated being paid. A recent example of this is the court cases with regards to the
payment of lump sum compensation to people with asbestos-related injuries.
53

Calculation
The claims liability is calculated based on standard actuarial techniques. These techniques
involve looking at trends in historic claims data and projecting these trends into the future.
Where possible, both the numbers of claims receiving payments and the average amounts of
these payments are analysed separately. When claim numbers are too unstable for this method
to be reliable an analysis of aggregate payments is undertaken.
The claims liability consists of:
• outstanding payments in respect of reported but unsettled claims
• claims that have been incurred but not yet reported (IBNR) to ACC
• future payments for claims that are currently closed but may re-open in the future
• the costs of managing reported but unsettled, re-opened and IBNR claims.
Some elements of the claims liability are subject to more uncertainty than others. For past injury
years, a higher proportion of the ultimate number of claims for that year will have been reported.
These reported claims will have a longer history of payments and a smaller outstanding amount
than claims reported in more recent injury years. IBNR claims have no payment history and must
be estimated in their entirety. Hence the claims liability estimate for more recent injury years will
be subject to more uncertainty.
Claim payments are analysed separately for each class of beneﬁ t. These include weekly
compensation, medical treatments (split into four subgroups), rehabilitation beneﬁ ts (split by the
type of rehabilitation), independence allowance, lump sums and death beneﬁ ts. This is done so
that the unique characteristics of each beneﬁ t type can be reﬂ ected in the analysis. Conducting
the analysis in this way should reduce uncertainty in the results.
Estimated future claim payments are adjusted in line with expectations of future inﬂ ation. These
inﬂ ated cash ﬂ ows are then discounted into present-day dollar amounts. The discount rate used
is based on government bond yields. This is in accordance with accounting standards and makes
an approximate allowance for the investment returns expected to be received in the future. The
longer the expected outstanding duration of a claim is, the greater the impact of discounting will
be on the present value of the cash ﬂ ows associated with that claim.
The liability can be thought of as the lump sum needed to be invested now in order to meet the
expected future payments for injuries that occurred before the liability valuation date as they fall
due. The estimated claims liability is on a ‘best estimate’ basis. This means there is no deliberate
over- or under-statement of any component of the liability; there are no margins built into any
of the assumptions used to set the claims liability. Due to the uncertainty in the claims liability
estimate and the number of assumptions required in its determination, it is likely that actual
experience will differ from the stated estimate.
The assumptions and methodology used to estimate the claims liability are set with reference to
relevant accounting and actuarial professional standards and guidance from New Zealand-based
general insurers.
54

Estimating the present-day value of all future costs for injuries occurring before the liability
valuation date gives an idea of the true cost of providing injury cover. This differs from
considering just the claim payments expected in the next ﬁ nancial year. Current legislation
requires ACC to ‘fully fund’ the cost of injuries in most accounts. ACC must therefore hold assets
which are expected to be at least as large as the expected claims liability. This necessitates the
estimation of present values of all future costs.
External advice on liability valuation
PricewaterhouseCoopers (PwC) Sydney provides independent actuarial advice to ACC. This
service includes production of the annual claims liability valuation. This is the fourth year that
PwC has been involved in the valuation of ACC’s claims liability. PwC provides a number of other
consulting services to ACC and, as such, has a good understanding of the ACC Scheme.
The claims liability valuation is produced and reported in accordance with Financial Reporting
Standards (FRS-35).
Change
When the claims liability is estimated each year it uses as much claims payment history as is
available. This means that each year more data is used. This allows recent Scheme experience to
be incorporated into the claims liability valuation. Where recent experience differs from the past
the inclusion of this new data may result in changes to the assumptions used to estimate the
claims liability.
In addition to changes in Scheme experience, changes in economic conditions and societal
attitudes will also affect the claims liability estimate. For example, increases in assumed future
inﬂ ation will increase expected future claims costs. However, if interest rates increase, so should
future investment returns, which will mean that ACC can hold lower levels of assets to meet future
claims payments.
Changes in the methodology used to estimate the claims liability will also affect the estimated
amount. Where a more stable or appropriate method for estimating a component of the liability
is identiﬁ ed, the result of applying this method can be a change in the liability. This should only
occur when the original estimate is considered to be inappropriate in light of new information or
better estimation techniques.
There were four main, non-economic drivers of the increase in the claims liability between
30 June 2006 and 30 June 2007. These were as follows:
• recent growth in the costs associated with the social rehabilitation support provided to
seriously injured claimants is driven by the costs of providing home-based rehabilitation
and residential support. This increase in payments is compounded by the length of time
seriously injured claimants are expected to receive these services from ACC
• the valuation assumptions for weekly compensation paid to claimants who have
survived their injuries have been increased. On average, claimants are receiving weekly
compensation payments for longer and there have been more new claims than expected
receiving payments
55

• changes to the way other rehabilitation costs have been modelled have led to a better
understanding of the likely future payments in respect of backdated attendant care costs,
which were not explicitly provided for in previous claims liability valuations
• changes in experience for payment of the independence allowance resulted in higher
numbers of claims assumed to receive this type of payment in the future.
Offsetting the increases mentioned above, the interest rate used to discount future cash ﬂ ows
has increased signiﬁ cantly since 30 June 2006, from 5.83% to 6.61%.
Changes in the claims liability will affect the levy rates ACC sets annually. The expected fully
funded costs of each levy year come from the claims liability valuation and form the basis of the
levy rates for the year. The levy rates are also affected by:
• the expected earnings, or number of motor vehicles, over which the claim costs must
be spread
• the levels of the reserves (funds held to cover the costs of claims which have already
occurred) in each of the accounts
• the method used to fund any reserves shortfall at the start of the levy year (for example, if
the shortfall is funded over the next ﬁ ve years there will be less impact on levy rates than if
it was funded over only one year).
56

Part Four
Corporate Governance
The Accident Compensation Corporation (ACC) operates under the Injury Prevention,
Rehabilitation, and Compensation Act 2001. It is a Crown entity for the purposes of the Crown
Entities Act 2004. ACC is exempt from income tax, although proﬁ ts earned by subsidiary
companies are subject to tax. ACC is governed by a Board appointed by the Minister for ACC.
The Board’s philosophy on corporate governance is to attain the highest levels of transparency,
accountability, integrity, efﬁ ciency and sustainability. Effective management and sound ﬁ scal
controls are regarded as fundamental.
investment
service delivery
audit committee
committee
committee
remuneration
claimant management
injury prevention
committee
system committee
committee
code of proper
practice for acc
risk and assurance
board members
– Financial control health audits
– Effectiveness audits
– Project audits
ethics hotline
– Control self-audits
– Senior management review
– Audit Committee review
– Board review
Disclosure Controls
Internal Control over
– Business continuity plan
and Procedures
Financial Reporting
Management’s annual report on effectiveness of internal control over ﬁ nancial reporting based on:
– internal audit evaluation of the efﬁ ciency or otherwise of the internal control
– line management performing self-assessment on the appropriateness and efﬁ ciency of their internal control
– the independent auditor’s attestation and report on management assertions
These activities provide evidence of effective controls for all ‘relevant assertions’ for all ‘signiﬁ cant accou

nts
and disclosures’.
57

The ACC Board
There are eight non-executive members of the ACC Board. They are appointed for three years,
with the option of reappointment for a further three-year term. At 30 June 2007, there were seven
members, with one vacancy.
Board responsibilities
A Statement of Intent is prepared annually which includes ACC’s:
• roles and governance structure
• functions in relation to the management of each Scheme Account
• relationship with its subsidiary companies
• investment statement
• ﬁ nancial statements
• all matters relating to the provision of services by ACC, its subsidiaries and the use of other
service providers.
The Board is responsible for ensuring that ACC carries out its statutory requirements under the
Injury Prevention, Rehabilitation, and Compensation Act 2001 of:
• promoting measures to reduce the incidence and severity of personal injury (including
occupational disease and treatment injury)
• providing compensation entitlements
• managing the assets, liabilities and risks for the various Scheme Accounts.
The Board is responsible for the governance of ACC and has a formal schedule of matters
reserved for its decision. This includes:
• establishing the strategic direction of ACC
• ensuring the appropriate standards are in place
• ﬁ nancial reporting and approval of annual budgets
• approving major acquisitions, disposals and signiﬁ cant capital expenditure
• approving signiﬁ cant changes in accounting policies
• selecting and appointing the Chief Executive and annually reviewing the Chief Executive’s
performance
• ensuring ACC is managed within a framework of prudent and effective controls and
agreeing changes to the organisation structure
• ensuring compliance with all relevant statutes, regulations and ministerial directives.
58

Delegation
The Board sets and monitors clear policies that deﬁ ne the individual and collective
responsibilities of management, the operating structure and lines of responsibility and delegated
authority.
The Board delegates day-to-day management of ACC to the Chief Executive, who is responsible
for ensuring ACC achieves its business objectives, including risk management and ethical
behaviour, and for ensuring that its system of internal control is functioning effectively and
efﬁ ciently.
The Chief Executive and Board operate under procedures based on the Committee of Sponsoring
Organisations of the Treadway Commission (COSO) framework of internal controls.
Advice
Board members have direct access to the advice and services of external, independent
professional advisors.
Remuneration
Remuneration for Board members is set in accordance with the rates established by Government.
Induction and development
A Code of Proper Practice for ACC Board members covers ethical issues. A full induction
programme is available for new members.
Disclosure of interests
The Crown Entities Act 2004 provides a mechanism for the disclosure of interest, and the process
has been followed. The relevant interests of Board members are reviewed monthly.
Board and committee structure
The Board appoints a number of committees in specialised areas of activity. The committees have
limited delegation, manage detail, and are able to take independent advice. During the year, six
committees met and reported regularly to the Board.
Audit Committee
The Audit Committee meets quarterly to monitor and review processes, systems and results to
ensure the Board fulﬁ ls its audit responsibilities.
The committee:
• monitors ACC’s reporting processes and internal control systems
59

• reviews ﬁ nancial information and the ACC Annual Report
• reviews and appraises external and internal audits and auditors
• meets with ACC’s external auditor, Ernst & Young, independent of ACC’s senior
management, to ensure there are no unresolved issues
• reviews the scope and activities of ACC’s Risk and Assurance Business Unit
• monitors the relationship with external auditors
• monitors compliance with relevant legislation.
Claimant Management System Committee
This special purpose committee was established to ensure the effective implementation of the
Claimant Management System project ‘Eos’.
The committee:
• ensured the project remained aligned to ACC’s strategic directions and priorities
• managed risks relating to costs and timeliness of delivery.
The committee was dis-established in June 2007 when Phase 1 of the Eos project was successfully
completed.
Injury Prevention Committee
This committee oversees and monitors ACC’s injury prevention strategy and activities, ensuring
they are evaluated for their effectiveness in meeting strategic objectives.
Investment Committee
This Board committee meets monthly to set risk-tolerance guidelines and benchmarks, and to
review the investment activity of ACC’s investment portfolios. The committee controls the policy
and procedural operational frameworks for the investment of funds. These frameworks are
reviewed and updated when required.
Remuneration Committee
This committee reviews the performance and remuneration of the Chief Executive. The committee
also considers any proposed remuneration policies for senior executives.
Service Delivery Committee
Initially, this committee’s role was to oversee ACC’s rehabilitation and compensation functions.
The committee was responsible for overseeing and monitoring the ACC Scheme and relevant
operational expenditure, and ensuring alignment of service delivery with ACC’s strategic
objectives. The role of this standing committee was refocused during the year to concentrate on
the detailed information on ACC’s performance provided in the quarterly reports to the Minister,
which forms an important aspect of ACC accountability. The committee now meets quarterly.
60

Chart of ACC Board and Committee Meetings(1)
Claimant
Management
Fees
Committee
ACC Board
Audit
Investment
Injury Prevention Remuneration
System
Service Delivery
$000
Meetings held
13
4
11
6
5
7
4
Dr David Collins (B)
Chair
Last meeting
Chair
06/08/06
Last meeting
Last meeting
17/08/06
17/08/06
Attendance 2
n/a
1
n/a
1
n/a
n/a
10
Brenda Tahi (B)
Deputy Chair
Chair to
Chair from
16/02/07
21/09/06
3
Interim Chair
from 21/09/06
9
Attendance
12
4
11
6
5
n/a
n/a
61
Dr Don Turkington (B)
Chair
Attendance
12
3
10
n/a
n/a
n/a
n/a
32.5
Gregory Fortuin (B)
Last meeting
15/02/07
Attendance
12
n/a
11
4
n/a
n/a
n/a
32.5
Peter Neilson (B)
Deputy Chair
Chair from
First meeting
Chair
Chair from
from 12/02/07
16/05/07
16/03/07
7/05/07
Attendance
13
1
n/a
n/a
3
7
4
36
Tord Kjellstrom (B)
Last meeting
Chair
18/05/07
Last meeting
18/04/07
Attendance
10
n/a
n/a
3
n/a
n/a
2
29.5
Dr Janice Wright (B)
Deputy Chair
Last meeting
Chair
17/8/06 to
15/02/07
Last meeting
11/2/07
14/12/06
Last meeting
16/2/07
Attendance
8 n/a
n/a
n/a
1
6 3
25.5
Philippa Dunphy (B)
First meeting
First meeting
First meeting
14/12/06
15/03/07
16/03/07
Attendance 6
n/a
3
n/a
3
n/a
n/a
18.5
Wayne Butson (B)
First meeting
First meeting
14/12/06
19/04/07
Attendance
5
n/a
n/a
2
n/a
n/a
n/a
19
Dr Marie Bismark (B)
First meeting
First meeting
First meeting
First meeting
16/03/07
17/05/07
19/04/07
7/05/07
Attendance 4
1
n/a
2
n/a
n/a
1
11
Ray Potroz (B)
Last meeting
Last meeting
17/08/06
17/08/06
Attendance
2
n/a
n/a
n/a
1
n/a
n/a
6
Tom Davies (S)
Attendance n/a
4
n/a
n/a
n/a
n/a
n/a
15
Pat Duignan (S)
Attendance n/a
n/a
10
n/a
n/a
n/a
n/a
25.5
Trevor Janes (S)
Attendance n/a
n/a
11
n/a
n/a
n/a
n/a
30
Marcel van den Assum (S)
Attendance
n/a
n/a
n/a
n/a
n/a
7
n/a
28
B = Board Member S = Specialist Member n/a – not applicable
1. All ACC Board members are entitled to attend Board committee meetings, whether or not they have been formally appointed to the committee.
This table shows only the attendance of formally appointed committee members and the Board Chair as an ex ofﬁ cio member. It does not show
voluntary attendance by other Board members.
61

Indemnity and insurance
Members and staff have statutory indemnity under the Crown Entities Act 2004. There is also
a comprehensive insurance programme in place. Insurance needs and coverage are managed
progressively to ensure ACC’s risk proﬁ le and exposure are at appropriate levels.
ACC’s status of compliance
ACC conducts an annual self-assessment of its compliance with legislation. This year’s
assessment indicates there is only one Act, the Public Records Act 2005, with which ACC is not
yet fully compliant. A framework is being developed to attain compliance with this Act.
Auditor independence
The Controller and Auditor-General is, by statute, the auditor of ACC. Ernst & Young has been
contracted to undertake the audit in accordance with the Auditor-General’s auditing standards.
International ﬁ nancial reporting standards
ACC established a steering committee to oversee the conversion to New Zealand equivalents to
International Financial Reporting Standards (NZ IFRS). This committee completed its work in
May 2007 and the new ﬁ nancial reporting system was ready for implementation on 1 July 2007.
Business continuity planning
During the year, ACC has updated and reviewed all its network business continuity plans,
testing them, posting them on the internal website, and communicating them through follow-
up workshops. With a global inﬂ uenza pandemic one of the most signiﬁ cant threats facing
New Zealand, ACC has developed a plan closely aligned with the Ministry of Health’s National
Pandemic Plan. Much of the work carried out in this area is not only applicable to pandemic ﬂ u
but also to other crises that may have a long-term effect on the organisation.
Sustainability
In keeping with the direction set by the Government for sustainability practices across the
public sector, ACC is committed to minimising waste and conserving consumption of energy and
resources.
Current initiatives include:
• recycling or donating used computers and furniture
• recycling of plastic, paper, glass, aluminium and tin
• using obsolete medical consumable stock for training
• implementing an internal Sustainable Workplace Action Plan (SWAP)
62

• purchasing seven fuel-saving, hybrid cars for the ACC ﬂ eet
• encouraging a reduction of staff air-travel by using video-conferencing
• adding sustainability requirements to contracts and tender evaluations
• active membership of the New Zealand Business Council for Sustainable Development and
the Sustainable Business Network
• employing a staff member dedicated to managing ACC’s sustainability programme.
ACC is now developing baseline measures and performance targets to measure progress in
waste/recycling, carbon reduction and energy saving. At the same time, more comprehensive
action plans for the next three years are under development. Under these plans ACC will:
• measure the carbon footprint and then reduce it and move toward a carbon-neutral position
by 2012
• increase the use of video-conferencing and other electronic means to reduce staff air travel
by 25% in 2007–2008
• expand sustainable procurement policies and practices for internal supply
• conduct further waste audits to understand the waste-mix better and identify areas for
improvement
• incorporate sustainable elements into the design of any new and upgraded premises (eg
solar energy)
• identify and inﬂ uence sustainable best practice across ACC’s partners and contractors.
These actions will ensure ACC meets its commitment to run a sustainable business and contribute
positively to society and the environment as well as meeting the service expectations of the
Minister for ACC.
Equal employment opportunities
ACC’s approach to staff recruitment and retention must reﬂ ect the changing labour market.
During the year, ACC carried out a full review of its workforce, using the information to develop
an Equal Employment Opportunity work programme for the next three years. ACC’s goals for 2010
are to:
• increase its median workforce age to at least 40, especially in key frontline positions
• match the public sector norms for employing people with a disability or impairment
• increase staff competence in working with those with disabilities
• increase ethnic diversity of staff in target regions to better reﬂ ect New Zealand’s population
• increase staff cultural competence to better service Ma¯ori, Paciﬁ c and Asian peoples in
Auckland and elsewhere.
63

During the next 12 months, ACC will review its recruitment strategy, implement an age-
management strategy, develop an initiative to encourage people with disability or impairment
to apply for positions at ACC, and design competencies for staff engaging with people with a
disability or of different ethnicity.
ACC’s workforce proﬁ le
Age proﬁ le
• younger workforce than national and public service workforce
(which is now 38.4 compared with 40.8 nationally)
Ethnic proﬁ le
• ethnic diversity has increased but numbers of Paciﬁ c and Ma¯ori
staff remain lower than public service rates
Disability proﬁ le
• at 2.71%, rate of employees with disability signiﬁ cantly lower
than the estimated national workforce rate of 15%
Gender proﬁ le
• majority of workforce are women, signiﬁ cantly higher than
the public service and national labour forces with 72% female
compared to 28% male
ACC’s key activities against the seven key elements of the ‘good employer’ in 2006–2007 are
summarised below:
Element
ACC activity
Leadership, accountability and
• new strategic direction, culture and values
culture
• implementation of organisational development programmes
• consultative approach and methodology applied as standard
practice
• workforce planning function established to develop and
implement strategy supporting the management of workforce
diversity
Recruitment, selection and
• robust recruitment and selection processes
induction
• active monitoring of candidates and workforce demographics
according to age, ethnicity, gender and disability
• mixed advertising channels to reach candidates from all
demographics
• interviews to which candidates may bring a support person
• organisational induction programme for all staff
• Operations Recruitment Project (95 FTE) to pilot recruitment
initiatives targeting older workers
Employee development, promotion
• development and implementation of the Capability Development
and exit
Strategy
• core competencies identiﬁ ed and communicated for all staff
• training and development opportunities for all employees
• promotion based on merit
• all jobs advertised internally (unless exception rules apply)
Flexibility and work design
• ﬂ exible working arrangements considered in line with job
attributes and employee needs
• 12 month ﬂ exible working arrangement pilot completed with
positive results and recommendations
Remuneration, recognition and
• transparent, equitable and gender neutral job evaluation
conditions
practices
• inclusive remuneration and reward practice
• terms and conditions of employment free-from-bias
64

Element
ACC activity
Harassment and bullying
• managers and staff trained on their rights and responsibilities
prevention
• employee code of conduct and relevant policies available at all
times
• clear guidance provided for staff and managers regarding the
management of harassment complaints
Safe and healthy environment
• strong focus on employee health, safety and wellbeing through
provision of a range of support services including:
– employee assistance programme (EAP)
– professional supervision support programme
– staff claims unit with dedicated case managers
– staff health and wellbeing initiatives
• health and safety/WorkSafe policy and training
• audit completed on all ACC sites evaluating access for people
with disability in 2006
Wider government initiatives
The Statement of Service Performance details ACC’s contribution to the Government’s overall
policy through its wider government initiatives. A number of government agencies and
community organisations work in the injury prevention, workplace, and health and disability
sectors. ACC is committed to working with such agencies to overcome gaps and duplication in
delivery and to make the best use of resources to achieve common goals.
65

ACC subsidiary companies
Catalyst Risk Management Limited
Catalyst Risk Management Ltd (Catalyst) is a wholly-owned subsidiary of ACC established in 1999
to provide a channel for services offered commercially by ACC.
Catalyst’s services include:
• injury rehabilitation management – case and claims management for ACC and self-insuring
ACC Partnership Programme employers
• injury prevention – as part of an integrated health and safety consultancy and/or
development of injury prevention-focused workplace programmes
• illness management – rehabilitation management to organisations with liability arising
from causes other than personal injury
• information systems for the case management of claims.
Catalyst’s injury management services are supplied direct to employers on the ACC Partnership
Programme or provided to large employers predominantly through arrangements with their
respective industry groups and commercial contracts with ACC for long-term claim management.
During the year, Catalyst has continued to provide injury management services to existing and
new clients and grown steadily with the development of services such as WorkCare and Wellness
Management Services.
Catalyst board meetings 2006–2007
Catalyst Board of Directors
Meetings held: 12
Members
Status
Meetings attended
Fees $000
Gregory Fortuin (Chair)
B
12
N/A
Linda Robertson
ID
12
15
Anthony Ractliffe
ID
12
15
Dr Jan White
E
8
N/A
B = Board Member E = ACC Executive ID = Independent Director
66

Dispute Resolution Services Limited
Dispute Resolution Services Ltd (DRSL) is a wholly-owned subsidiary company established in
1999 to manage an independent dispute resolution service. The contract between ACC and DRSL
governs their respective administrative and ﬁ nancial rights and obligations.
The company engages reviewers to review ACC decisions disputed by claimants and levy payers.
Reviewers are required by law to act independently in conducting reviews. There are legislated
timeframes to adhere to, and there is a right of appeal to the District Court by any of the parties
to the process.
DRSL is focused on providing impartial, prompt and professional service to all parties. It has
introduced options to improve the convenience and suitability of hearings. It also provides the
dispute resolution options of mediation and facilitation, which offer the parties the potential for
mutually acceptable solutions.
These options are in addition to the review services and using them does not remove the right to
review a decision.
During the year, DRSL’s introduction of earlier intervention services, particularly mediation,
progressed. Claimant use of mediation doubled. DRSL also trialled a range of new services to
complement the review process. It is anticipated that the adoption of these new services will
result in fewer escalated disputes and lift claimant perceptions of fairness and helpfulness.
DRSL continued to focus on improvements to lift standards of efﬁ ciency and customer service.
Its efforts were publicly recognised when DRSL was a winner in the Vero Excellence in Business
Support Awards 2007 and also the 2007 Computerworld Award for Excellence in the Use of ICT for
Customer Service.
DRSL board meetings 2006–2007
DRSL Board of Directors
Meetings held: 11
Members
Status
Meetings attended
Fees $000
Ray Potroz
B
1
N/A
(Chair until 31 August 2006)
Last meeting
16/08/06
Gavin Adlam
ID
10
15
(Acting Chair from
First meeting
September 2006)
as Acting Chair
20/09/06
Wendy Davis
ID
9
15
Brent Kennerley
ID
10
18
Dr Janice Wright
B
3
N/A
Last meeting
14/02/07
Wayne Butson
B
3
N/A
ID = Independent Director B = ACC Board Member
67

ACC Board Members
Brenda Tahi – Interim Chair
Appointed to the Board in November 2002, as Deputy Chair on 14 October 2003
and Interim Chair from 1 September 2006.
Brenda Tahi is a business consultant and company director. She has held senior
management and advisory positions in the public service and has worked in iwi
enterprise. She has also been a Director of the Institute of Geological and Nuclear
Sciences and the Hutt Valley District Health Board.
Currently Brenda serves on boards for entities in the tertiary education, research
and Ma¯ori sectors and for Huia NZ Ltd.
Brenda is Te Whanau a Ruataupare, of Ngati Porou, and also has links to Tuhoe.
Peter Neilson – Deputy Chair
Appointed to the Board on 22 November 2004 and appointed as Deputy Chair on
12 February 2007.
Peter Neilson is Chief Executive of New Zealand Business Council for Sustainable
Development. He is a member of the Stakeholder Council of the Waikato
Management School. Peter has experience as a consultant in both the public and
private sectors where he worked on a number of projects including strategic and
business planning.
Formerly a Member of Parliament and Minister, including Minister of Revenue and
Associate Minister of Finance and State-Owned Enterprises, Peter has extensive
knowledge of the public sector, investment and general management.
Dr Marie Bismark
Appointed to the Board on 1 March 2007.
Dr Bismark is a specialist in health law and patients’ rights. As a Senior Solicitor
with Buddle Findlay, she provides legal advice to a range of health providers,
registration authorities, and Crown entities.
In 2004–2005, Marie was a Harkness Fellow at the Harvard School of Public
Health. She has published a number of papers and book-chapters on topics
including treatment injury and healthcare dispute resolution. Marie is a member
of the Wellington Law Society Ethics Committee and the Bioethics Council.
68

Wayne Butson
Appointed to the Board on 6 December 2006.
Wayne Butson is an industrial relations specialist. As General Secretary of the
Rail and Maritime Transport Union, Wayne has had signiﬁ cant experience in
developing and implementing injury prevention and rehabilitation programmes
in workplaces. Wayne has recently been appointed Chair of ACC subsidiary
company, Dispute Resolution Services Limited.
Pip Dunphy
Appointed to the Board on 12 December 2006.
Pip Dunphy has worked in the ﬁ nancial sector for over 20 years specialising
in banking, ﬁ nance and investment management. She is a member of the
Nominating Committee for the Guardians of New Zealand Superannuation and
was a member of the Earthquake Commission Board. She is a director of Shamrock
Superannuation Limited.
Gregory Fortuin
Appointed to the Board on 18 October 2002.
Gregory Fortuin is a company director with signiﬁ cant experience in the insurance
industry. He held the position of Race Relations Conciliator, and is a Director of
New Zealand Post and Kiwibank and the Honorary Consul of the Republic of South
Africa. Gregory is also the Chairman of the Youth Suicide Awareness Trust and a
Director of the New Zealand Prison Fellowship National Board.
Dr Don Turkington
Appointed to the Board on 12 December 2005.
Dr Don Turkington is a company director from Auckland with a PhD in Economics.
He is Chair of Walker Capital Management and has worked as Executive Director
of Forsyth Barr and as Managing Director of Cavill White and of Morgan Grenfell.
He has expertise in ﬁ nancial services and investment management and has
governance experience in commercial, cultural, educational and community
organisations.
69

Board members who resigned during 2006–2007:
Dr David Collins
Resigned as Chair and Board member with effect from September 2006 to take up the
appointment of Solicitor-General.
Dr Tord Kjellstrom
Completed his term and resigned as a Board member with effect from June 2007.
Ray Potroz
Completed his term and resigned as a Board member with effect from September 2006.
Dr Janice Wright
Resigned as a Board member with effect from March 2007 to take up the appointment of
Parliamentary Commissioner for the Environment.
70

Executive leadership team
The ACC Executive Leadership Team, led by the Chief Executive, is responsible for the leadership
and management of the organisation, and is accountable for the achievement of ACC’s outcomes.
Chief Executive
Dr Jan White
Director,
Director,
Chief Executive’s Ofﬁ ce
Ma¯ori & Community Relations
Mike Spraggon
Hemi Toia
Chief
General Manager,
General Manager,
General Manager,
Operating Ofﬁ cer
Levy & Scheme Management
Strategic Policy & Research
Injury Prevention
Gerard McGreevy
Dr Keith McLea
Katrina Ings
Katie Sadleir
General Manager,
General Manager,
General Manager,
Information Management
Finance
Human Resources
Graeme Osborne
Ian Simpson
Denise Cosgrove
71

Part Five
Financial Statements
Contents
Statement of accounting policies .............................................................................................. 75
Consolidated and parent statement of ﬁ nancial performance ....................................................83
Consolidated and parent statement of movements in account reserves (equity) ........................85
Statement of ﬁ nancial performance and movements in account reserves (by account) .............. 86
Statement of ﬁ nancial position ................................................................................................ 94
Statement of cash ﬂ ows ........................................................................................................... 96
Statement of commitments ..................................................................................................... 98
Statement of contingent liabilities and assets ..........................................................................99
Notes to the ﬁ nancial statements ............................................................................................100
Statement of responsibility ..................................................................................................... 122
Report of the Ofﬁ ce of the Auditor-General ............................................................................. 123
Remuneration of employees ................................................................................................... 124
Comparative statement of ﬁ nancial performance ..................................................................... 125
Comparative statement of ﬁ nancial position ...........................................................................128
73

Statement of accounting policies
For the year ended 30 June 2007
a) Reporting entity
The ﬁ nancial statements are those of the Accident Compensation Corporation (ACC) which is
designated as a Crown Agent under the Crown Entities Act 2004.
ACC and its subsidiaries comprise the ACC Group.
The ﬁ nancial statements have been prepared in accordance with:
• the Crown Entities Act 2004;
• the Financial Reporting Act 1993; and
• the Injury Prevention, Rehabilitation and Compensation Act 2001 (referred to hereafter as
‘the Act’).
b) Measurement base
The ﬁ nancial statements are prepared on the basis of historical cost except where modiﬁ ed by
the revaluation of investments, freehold land and buildings, and the actuarial quantiﬁ cation of
claim liabilities.
c) Levy and residual levy
During 1998 and 1999 the basis of setting levies and residual levies moved from a ‘pay as you go’
basis to a fully funded basis for all levy and residual levy payers other than the Government in
respect of the Non-Earners’ Account.
Levies are now set on a full-funding basis for the Earners’, Work, and Motor Vehicle Accounts.
The Non-Earners’ and Treatment Injury Accounts have been fully funded by the Government from
1 July 2001 in respect of claims incurred from that date. Claims before that date continue to be
funded on a ‘pay as you go’ basis.
In addition to the above, residual levies are set to fund, by 2014, claims incurred prior to 1 July
1999 in respect of the Residual Claims, Earners’ and Motor Vehicle Accounts.
d) Source and application of levy and residual levy income
The Act requires ACC to record levy and residual levy income by individual Accounts. The source
and application of levy and residual levy income for each Account are as follows:
(i) Residual Claims Account
The Residual Claims Account derives its funds from:
• residual levies from employers on the earnings of their employees; and
• residual levies from earners who are self-employed.
75

Statement of accounting policies
For the year ended 30 June 2007
These funds are applied in accordance with the Act in respect of accidents, prior to 1 July 1999,
that are:
• non-work injury (other than motor vehicle injury) suffered by an earner on or after 1 April
1974 and before 1 July 1992, and
• work injury, other than motor vehicle, suffered on or after 1 April 1974.
Note: The Residual Claims Account was named the Employers’ Account prior to 1 July 1999.
(ii) Motor Vehicle Account
The Motor Vehicle Account derives its funds from:
• levies and residual levies on motor vehicle ownership; and
• the levies portion of the excise duty on petrol.
These funds are applied in accordance with the Act in respect of motor vehicle injury suffered on
or after 1 April 1974.
(iii) Non-Earners’ Account
The Non-Earners’ Account derives its funds from appropriations by Parliament.
These funds are applied in accordance with the Act in respect of personal injury (other than motor
vehicle injury) to non-earners suffered on or after 1 April 1974.
(iv) Earners’ Account
The Earners’ Account derives its funds from levies and residual levies payable by earners on their
earnings.
These funds are applied in accordance with the Act in respect of personal injury to earners (other
than work injury or motor vehicle injury) suffered on or after 1 July 1992.
(v) Self-Employed Work Account
The Self-Employed Work Account derives its funds from earners who are self-employed up to 31
March 2007.
These funds are applied in accordance with the Act in respect of work injury suffered on or after
1 July 1999 by self-employed who are insured by ACC, and for all self-employed work injuries
incurred on and after 1 July 2000.
The Account reserve in the Self-Employed Work Account at 31 March 2007 was transferred to the
Work Account on 1 April 2007.
(vi) Employers’ Account
The Employers’ Account was created on 1 April 2000. This Account derives its funds from
employers up to 31 March 2007.
76

Statement of accounting policies
For the year ended 30 June 2007
These funds are applied in accordance with the Act in respect of work injury suffered on or after
1 April 2000 by employees of employers who are insured by ACC, and for all employees’ work
injuries incurred on and after 1 July 2000.
The Account reserve in the Employers’ Account at 31 March 2007 was transferred to the Work
Account on 1 April 2007.
(vii) Work Account
The Work Account was created on 1 April 2007 and incorporates the former Self-Employed Work
and Employers’ Accounts.
The Work Account derives its funds from employers and earners who are self-employed from 1
April 2007.
These funds are applied from 1 April 2007 in accordance with the Act in respect of work injury
suffered:
• on or after 1 April 2000 by employees of employers who are insured by ACC, and for all
employees’ work injuries incurred on and after 1 July 2000, and
• on or after 1 July 1999 and before 1 July 2000 by self-employed persons who were insured
by ACC, and for all self-employed work injuries incurred on and after 1 July 2000.
(viii) Treatment Injury Account
The Medical Misadventure Account was renamed the Treatment Injury Account on 1 April 2007.
The Treatment Injury Account derives its funds from allocations from the Earners’ Account (in the
case of an earner) or the Non-Earners’ Account (in the case of a non-earner).
These funds are applied in accordance with the Act in respect of personal injury arising from
medical misadventure suffered on or after 1 July 1992 or arising from treatment on or after
1 July 2005.
e) Allocation of indirect income and expenditure
Indirect income and expenditure are allocated to each Account as follows:
(i) Investment income
Investment income by investment portfolio is allocated based on the investment balances of the
respective Accounts.
(ii) Administration costs
Allocation of administration costs is based on the administration activities undertaken and
associated volumes for each Account.
77

Statement of accounting policies
For the year ended 30 June 2007
f) Levy and residual levy income
All levy and residual levy income is recognised in the period to which it relates.
The proportion of levies not earned at the reporting date is recognised in the Statement of
Financial Position as levy received in advance.
g) Claims liability
The claims liability was ﬁ rst recognised in the ﬁ nancial statements in the 1999 ﬁ nancial year.
In accordance with ﬁ nancial reporting standards this is revalued annually based on the latest
actuarial information.
Adjustments to the liability are reﬂ ected in the Statement of Financial Performance with the
overall liability being reﬂ ected in the Statement of Financial Position.
Future expenditure commitments exist in respect of:
• Claims notiﬁ ed and accepted in the current and previous years, but which will not be met
until future years; and
• Claims incurred but not notiﬁ ed to, or accepted by, ACC at balance date.
h) Subsidiaries
The consolidated ﬁ nancial statements incorporate the ﬁ nancial statements of ACC and its
subsidiaries, which have been consolidated using the purchase method. All intercompany
transactions, balances and unrealised surpluses are eliminated on consolidation.
The trading subsidiary companies are detailed in Note 11. Subsidiaries are held at cost.
i) Associate companies
Associates are investees (but not subsidiaries or joint ventures) in which the ACC Group has the
capacity to affect substantially, but not unilaterally determine, the operating and/or ﬁ nancial
policy decisions. Associates have been reﬂ ected in the consolidated ﬁ nancial statements on an
equity accounting basis, which recognises the ACC Group’s share of retained surpluses in the
Consolidated Statement of Financial Performance and its share of post acquisition increases or
decreases in net assets, in the Consolidated Statement of Financial Position.
j) Investments
Investments are recorded at market value. Where ACC owns more than 5% of the issued capital
of a company, the market value of the equity investments is discounted to reﬂ ect the impact
of selling large holdings. Market value for publicly listed investments has been determined by
reference to market values at balance date. For non-listed investments, market rates have been
determined based on the cost and adjusted for performance of the business since that date.
Changes in market value are credited or charged to the Statement of Financial Performance by
Account in accordance with the basis used for allocating investment income.
78

Statement of accounting policies
For the year ended 30 June 2007
Interest income is recognised in the Statement of Financial Performance as it accrues. Dividend
income is recognised in the Statement of Financial Performance on the date that the dividend is
declared or, where more appropriate, on the last date to register for the dividend.
k) Financial instruments
ACC has various derivative ﬁ nancial instruments which are used to reduce ACC’s exposure to
ﬂ uctuations in foreign currency exchange rates, interest rates and equity markets. Derivatives
may also be used temporarily in lieu of purchasing bonds, equities or currency. The use of
ﬁ nancial instruments is covered by investment policies which control the risks associated with
such instruments.
All ﬁ nancial instruments are recorded on the Statement of Financial Position at market value, and
the gains or losses from these ﬁ nancial instruments are recognised in the Statement of Financial
Performance as revenue or expense items as they arise.
l) Foreign currencies
Transactions in foreign currencies are converted to New Zealand dollars at the rate of exchange
ruling at the date of the transaction. Short-term transactions covered by foreign currency forward
contracts are measured and reported at the forward rate of exchange speciﬁ ed in those contracts.
At balance date, foreign currency monetary assets and foreign currency forward contracts,
designated as economic hedges, are converted at the rate ruling at balance date with exchange
variations arising from the translation process being credited or charged to the Statement of
Financial Performance by Account based on the investment balances of the respective Accounts.
m) Investment properties
Investment properties have been valued at net market value. Depreciation is not charged on
investment properties. Revaluation gains on such properties have been recognised in the
Statement of Financial Performance.
n) Intangible assets
Intangible assets are stated at cost less accumulated amortisation.
Goodwill represents the excess of the purchase consideration over the fair value of the net
tangible and identiﬁ able intangible assets, acquired at the time of the purchase of a business, or
an equity interest in a subsidiary or associate.
Intangible assets are amortised using the straight-line method over the period during which
beneﬁ ts are expected to be received. This is a maximum of 10 years.
o) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation except for
freehold land, which is shown at valuation, and buildings, which are shown at valuation less
accumulated depreciation.
79

Statement of accounting policies
For the year ended 30 June 2007
Revaluations are transferred to the asset revaluation reserve for that class of assets. If any
revaluation reserve has a deﬁ cit, that deﬁ cit is recognised in the Statement of Financial
Performance in the period it arises. In subsequent periods any revaluation surplus that reverses
previous revaluation deﬁ cits is recognised as revenue in the Statement of Financial Performance.
Costs of development projects are accumulated as work in progress until the project is
completed. At that stage the costs are transferred to the appropriate ﬁ xed asset category and are
depreciated accordingly. Capitalised project costs comprise direct project cost only.
p) Depreciation
Depreciation of property, plant and equipment, other than freehold land, is charged on a straight-
line basis so as to allocate the cost of assets, less any estimated residual value, over their
expected lives.
Leasehold improvements are depreciated over the lower of the remaining life of the lease or
10 years.
The estimated useful lives are as follows:
Buildings 50
years
Freehold improvements
10 years
Leasehold improvements
up to 10 years
Furniture, ﬁ ttings and equipment
4 years
Mainframe computer and network equipment including software   5 years
Personal computer equipment
3 years
Motor vehicles
5 years
q) Impairment
If the recoverable amount of an asset is less than its carrying amount, the item is written down to
its recoverable amount less any selling costs to be incurred. The write down of an asset recorded
at historical cost is recognised as an expense in the Statement of Financial Performance. When
a revalued asset is written down to recoverable amount the write down is recognised as a
downward revaluation to the extent that the revaluation reserve of the class of asset concerned is
in credit.
The carrying amount of an asset that has previously been written down to recoverable amount is
increased to its current recoverable amount if there has been a reversal of the impairment loss.
The increased carrying amount of the item will not exceed the carrying amount that would have
been determined if the write down to recoverable amount had not occurred. For assets that are
not revalued, the reversal is recognised in the Statement of Financial Performance. For revalued
assets, the reversal is recognised as revenue to the extent that the impairment was recognised as
an expense, and the balance is treated as an upward revaluation.
80

Statement of accounting policies
For the year ended 30 June 2007
r) Statement of cash ﬂ ows
The following are the deﬁ nitions of the terms used in the Statement of Cash Flows:
i)
Cash is considered to be cash on hand and current accounts with banks, net of bank
overdrafts. Cash does not include short-term deposits which are included in investments.
ii)
Investing activities are those activities relating to the acquisition, holding and disposal
of property, plant and equipment and investments, excluding securities falling within the
deﬁ nition of cash. Realised gains and losses on the disposal of investments are classiﬁ ed as
investing activities. Interest income and dividend income received from investing activities
are classiﬁ ed as operating activities.
iii) Financing activities are those activities that result in changes in the size and composition of
the capital structure of ACC.
iv) Operating activities include all transactions and other events that are not investing or
ﬁ nancing activities.
s) Income tax
ACC is exempt from payment of income tax under section 259(5) of the Act. The subsidiary
companies are, however, liable for income tax.
Tax effect accounting is applied on a comprehensive basis to all timing differences. A debit
balance in the deferred tax account, arising from timing differences or income tax beneﬁ ts from
income tax losses, is only recognised if there is a virtual certainty of realisation.
The income tax expense charged to the Statement of Financial Performance includes both the
current year’s provision and the income tax effect of timing differences calculated using the
liability method.
t) Employee entitlements
A liability for annual leave, long service leave and retirement leave is accrued and recognised in
the Statement of Financial Position. The liability is equal to the present value of the estimated
future cash outﬂ ows as a result of employee services provided at balance date.
u) Leases
Where most of the risks and rewards of ownership are retained by the lessor, leases are classiﬁ ed
as operating leases and costs are expensed in the period in which they are incurred.
Commitments under lease agreements are disclosed in the Statement of Commitments.
v) Receivables
Receivables are stated at their estimated realisable value.
An estimate for doubtful debts is made when collection of the full amount is no longer probable.
Bad debts are written off when identiﬁ ed.
81

Statement of accounting policies
For the year ended 30 June 2007
w) Budget ﬁ gures
The budget ﬁ gures for the Statement of Financial Performance are those approved by the Board
at the beginning of the ﬁ nancial year. The Statement of Financial Position and Statement of Cash
Flows have been restated from the budget using actual 2006 ﬁ gures as the opening position.
The budget ﬁ gures have been prepared in accordance with generally accepted accounting
practice in New Zealand and are consistent with the accounting policies adopted in preparing the
ﬁ nancial statements.
The budget ﬁ gures are unaudited.
x) Changes to accounting policies
There have been no changes in accounting policies. All policies have been applied on a basis
consistent with the previous year.
y) Comparatives
To ensure consistency with the current period, comparative ﬁ gures have been restated where
appropriate.
82

Consolidated statement of ﬁ nancial performance
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Net levy income
Residual Claims Account
315,235
249,887
291,407
Motor Vehicle Account
589,968
561,381
591,826
Non-Earners’ Account
719,222
673,660
659,774
Earners’ Account
905,483
765,175
790,691
Self-Employed Work Account
101,449
117,313
115,273
Employers’ Account
387,182
464,907
510,995
Work Account
150,367
–
–
Treatment Injury Account
121,389
119,849
115,532
Total net levy income
1&4
3,290,295 2,952,172 3,075,498
Expenditure
Rehabilitation expenditure
Vocational rehabilitation
46,658
46,069
38,638
Social rehabilitation
396,164
346,127
314,408
Medical treatment
458,484
453,994
402,441
Hospital treatment
175,593
163,158
154,564
Public health acute services
322,088
342,575
303,138
Dental treatment
27,375
24,576
24,277
Conveyance for treatment
54,062
51,681
50,864
Backdated attendant care
8
(2,498)
–
5,334
Miscellaneous claim costs
6,627 6,279
11,267
1,484,553 1,434,459 1,304,931
Compensation expenditure
Income maintenance
775,647
727,956
701,198
Independence allowances
35,259
33,059
37,154
Lump sums
49,066
36,909 18,147
Death beneﬁ ts
83,538
78,091
76,205
943,510 876,015 832,704
Operating costs
5
287,654
316,467
270,321
Injury prevention costs
40,007
43,284
41,365
Collection costs
52,566
53,974
49,775
Total expenditure 2,808,290
2,724,199
2,499,096
Operating surplus before adjustment to
482,005 227,973 576,402
claims liability
Adjustment to claims liability
23
1,020,498
673,613
1,321,069
(Deﬁ cit) from underwriting activities
(538,493)
(445,640)
(744,667)
after adjustment to claims liability
Net investment income
2&4
801,708
569,703
1,070,087
Other income
3&4
4,688
4,684
4,744
Surplus before tax
267,903
128,747
330,164
Income tax expense/(credit)
6
392
191
(52)
Net surplus after tax
267,511
128,556
330,216
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
83

Parent statement of ﬁ nancial performance
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Net levy income
Residual Claims Account
315,235
249,887
291,407
Motor Vehicle Account
589,968
561,381
591,826
Non-Earners’ Account
719,222
673,660
659,774
Earners’ Account
905,483
765,175
790,691
Self-Employed Work Account
101,449
117,313
115,273
Employers’ Account
387,182
464,907
510,995
Work Account
150,367
–
–
Treatment Injury Account
121,389
119,849
115,532
Total net levy income
1&4
3,290,295 2,952,172 3,075,498
Expenditure
Rehabilitation expenditure
Vocational rehabilitation
46,658
46,069
38,638
Social rehabilitation
396,164
346,127
314,408
Medical treatment
458,484
453,994
402,441
Hospital treatment
175,593
163,158
154,564
Public health acute services
322,088
342,575
303,138
Dental treatment
27,375
24,576
24,277
Conveyance for treatment
54,062
51,681
50,864
Backdated attendant care
8
(2,498)
–
5,334
Miscellaneous claim costs
6,627 6,279
11,267
1,484,553 1,434,459 1,304,931
Compensation expenditure
Income maintenance
775,647
727,956
701,198
Independence allowances
35,259
33,059
37,154
Lump sums
49,066
36,909 18,147
Death beneﬁ ts
83,538
78,091
76,205
943,510 876,015 832,704
Operating costs
5
286,293
314,102
266,377
Injury prevention costs
40,007
43,284
41,365
Collection costs
52,566
53,974
49,775
Total expenditure 2,806,929 2,721,834 2,495,152
Operating surplus before adjustment to
483,366 230,338 580,346
claims liability
Adjustment to claims liability
23
1,020,498
673,613
1,321,069
(Deﬁ cit) from underwriting activities
(537,132)
(443,275)
(740,723)
after adjustment to claims liability
Net investment income
2&4
801,708
569,703
1,070,087
Other income
3&4
2,170
1,740
875
Net surplus
266,746
128,168
330,239
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
84

Consolidated statement of movements in account reserves (equity)
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Account reserves – opening balance
(3,835,128)
(3,835,128)
(4,167,252)
(deﬁ cit)
Recognised revenues and expenses for
the year
Net surplus after tax
267,511
128,556
330,216
Increase in asset revaluation reserves
21
3,715
–
1,908
Total recognised revenues and expenses
271,226
128,556
332,124
for the year
Account reserves – closing balance
(3,563,902)
(3,706,572)
(3,835,128)
(deﬁ cit)
Parent statement of movements in account reserves (equity)
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Account reserves – opening balance
(3,833,585)
(3,833,585)
(4,165,732)
(deﬁ cit)
Recognised revenues and expenses for
the year
Net surplus
266,746
128,168
330,239
Increase in asset revaluation reserves
21
3,715
–
1,908
Total recognised revenues and expenses
270,461 128,168 332,147
for the year
Account reserves – closing balance
(3,563,124)
(3,705,417)
(3,833,585)
(deﬁ cit)
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
85

Statement of ﬁ nancial performance
and movements in account reserves (equity)
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Residual Claims Account
Net levy income
Residual levy
315,235
249,887
291,407
Total net levy income
315,235
249,887
291,407
Expenditure
Rehabilitation expenditure
Vocational rehabilitation
2,703
3,792
3,257
Social rehabilitation
24
22,455
54,931
132,651
Medical treatment
15,748
20,857
15,169
Hospital treatment
9,076
8,639
9,008
Public health acute services
17
–
–
Dental treatment
2,579
2,267
2,256
Conveyance for treatment
656
643
649
Backdated attendant care
8
259
–
760
Miscellaneous claim costs
2,606
2,247
3,648
56,099 93,376 167,398
Compensation expenditure
Income maintenance
147,803
146,988
157,465
Independence allowances
3,853
4,184
6,544
Lump sums
24
15,923
516
1,952
Death beneﬁ ts
13,169
12,168
14,752
180,748 163,856 180,713
Operating costs
5
24,049 25,756 25,572
Collection costs
5,993
6,153
5,191
Total expenditure
266,889 289,141 378,874
Operating surplus/(deﬁ cit) before
48,346 (39,254)
(87,467)
adjustment to claims liability
Adjustment to claims liability
23
(81,390)
(111,231)
303,867
Surplus/(deﬁ cit) from underwriting
129,736 71,977
(391,334)
activities after adjustment to claims
liability
Net investment income
57,022
49,626
98,182
Other income
209
135
96
Net surplus/(deﬁ cit)
186,967
121,738
(293,056)
Account reserve – opening balance
(1,881,551)
(1,881,551)
(1,588,495)
(deﬁ cit)
Net surplus/(deﬁ cit)
186,967
121,738
(293,056)
Account reserve – closing balance
(1,694,584)
(1,759,813)
(1,881,551)
(deﬁ cit)
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
86

Statement of ﬁ nancial performance
and movements in account reserves (equity)
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Motor Vehicle Account
Net levy income
Levy income from motor licensing
50,575
85,635
128,135
Levy income from petrol levy
187,574
173,238
177,160
Residual levy
351,819
302,508
286,531
Total net levy income
589,968
561,381
591,826
Expenditure
Rehabilitation expenditure
Vocational rehabilitation
5,158
5,706
4,687
Social rehabilitation
110,689
96,814
87,325
Medical treatment
20,672
22,280
19,207
Hospital treatment
10,677
10,923
10,256
Public health acute services
46,969
51,044
44,856
Dental treatment
1,620
1,438
1,460
Conveyance for treatment
10,635 10,648 10,278
Backdated attendant care
8
520
–
1,214
Miscellaneous claim costs
(1,531)
731
1,131
205,409 199,584 180,414
Compensation expenditure
Income maintenance
115,754
123,248
111,370
Independence allowances
4,893
4,856
5,118
Lump sums
5,947
9,686
5,187
Death beneﬁ ts
33,727
37,452
35,971
160,321 175,242 157,646
Operating costs
5
30,939
36,122
30,900
Injury prevention costs
6,572
8,137
8,161
Collection costs
11,806
11,820
11,293
Total expenditure 415,047 430,905 388,414
Operating surplus before adjustment to
174,921 130,476 203,412
claims liability
Adjustment to claims liability 23
410,471
160,980
316,119
(Deﬁ cit) from underwriting activities
(235,550)
(30,504)
(112,707)
after adjustment to claims liability
Net investment income
222,096
141,735
262,176
Other income
350
237
188
Net (deﬁ cit)/surplus
(13,104)
111,468
149,657
Account reserve – opening balance
(1,660,122)
(1,660,122)
(1,809,779)
(deﬁ cit)
Net (deﬁ cit)/surplus
(13,104)
111,468
149,657
Account reserve – closing balance
(1,673,226)
(1,548,654)
(1,660,122)
(deﬁ cit)
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
87

Statement of ﬁ nancial performance
and movements in account reserves (equity)
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Non-Earners’ Account
Net levy income
Levy income appropriated by Parliament 773,847
727,592
711,763
Less funding of Treatment Injury Account
(54,625)
(53,932)
(51,989)
Total net levy income
719,222 673,660 659,774
Expenditure
Rehabilitation expenditure
Vocational rehabilitation
1,047
1,246
893
Social rehabilitation
24
120,818
108,484
97,879
Medical treatment
172,431
164,647
150,393
Hospital treatment
42,066
40,428
37,168
Public health acute services
188,180
200,749
176,817
Dental treatment
13,245
12,404
12,110
Conveyance for treatment
25,587
24,075
24,015
Backdated attendant care
8
(2,897)
–
2,980
Miscellaneous claim costs
2,487
510
3,175
562,964 552,543 505,430
Compensation expenditure
Income maintenance
13,515
13,145
9,648
Independence allowances
17,148
14,415
17,757
Lump sums
24
16,838
7,318
3,612
Death beneﬁ ts
4,916
3,016
3,738
52,417 37,894 34,755
Operating costs
5
40,933
44,917
37,826
Injury prevention costs
9,049 9,393 9,376
Total expenditure 665,363
644,747 587,387
Operating surplus before adjustment to
53,859 28,913 72,387
claims liability
Adjustment to claims liability
23
324,687
115,577
207,265
(Deﬁ cit) from underwriting activities
(270,828)
(86,664)
(134,878)
after adjustment to claims liability
Net investment income
95,281
50,962
103,239
Other income
181
230
1
Net (deﬁ cit)
(175,366)
(35,472)
(31,638)
Account reserve – opening balance
(1,309,256)
(1,309,256)
(1,277,618)
(deﬁ cit)
Net (deﬁ cit)
(175,366)
(35,472)
(31,638)
Account reserve – closing balance
(1,484,622)
(1,344,728)
(1,309,256)
(deﬁ cit)
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
88

Statement of ﬁ nancial performance
and movements in account reserves (equity)
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Earners’ Account
Net levy income
Levy income
972,247 831,092 854,234
Less funding of Treatment Injury Account
(66,764)
(65,917)
(63,543)
Total net levy income
905,483 765,175 790,691
Expenditure
Rehabilitation expenditure
Vocational rehabilitation
21,567 19,035 16,093
Social rehabilitation
46,911
35,369
34,944
Medical treatment
176,701
168,204
150,474
Hospital treatment
79,109
72,349
68,788
Public health acute services
60,156
61,321
57,644
Dental treatment
8,241
7,062
6,983
Conveyance for treatment
12,031
11,210
11,075
Miscellaneous claim costs
1,166
945
1,112
405,882 375,495 347,113
Compensation expenditure
Income maintenance
282,503
248,289
236,979
Independence allowances
6,279
5,504
5,974
Lump sums
5,214
6,561
3,224
Death beneﬁ ts
21,291
17,395
17,273
315,287 277,749 263,450
Operating costs
5
110,484
114,647
97,494
Injury prevention costs
7,182
6,839
6,337
Collection costs
18,238
18,783
18,003
Total expenditure 857,073
793,513 732,397
Operating surplus/(deﬁ cit) before
48,410 (28,338)
58,294
adjustment to claims liability
Adjustment to claims liability
23
231,838
222,654
267,411
(Deﬁ cit) from underwriting activities
(183,428)
(250,992)
(209,117)
after adjustment to claims liability
Net investment income
208,433
175,830
308,894
Other income
784
593
306
Net surplus/(deﬁ cit)
25,789
(74,569)
100,083
Account reserve – opening balance
532,469
532,469
432,386
Net surplus/(deﬁ cit)
25,789
(74,569)
100,083
Account reserve – closing balance
558,258
457,900
532,469
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
89

Statement of ﬁ nancial performance
and movements in account reserves (equity)
For the nine months to
31 March 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Self-Employed Work Account
Net levy income
Levy income
101,449
117,313
115,273
Total net levy income
101,449
117,313 115,273
Expenditure
Rehabilitation expenditure
Vocational rehabilitation
1,690
2,370
2,023
Social rehabilitation
24
15,361
5,598
(12,472)
Medical treatment
9,950
16,020
13,555
Hospital treatment
5,784
7,050
7,034
Public health acute services
3,050
5,824
3,737
Dental treatment
386
475
461
Conveyance for treatment
719 1,092
963
Miscellaneous claim costs
52
131
109
36,992 38,560 15,410
Compensation expenditure
Income maintenance
26,593
33,051
27,440
Independence allowances
94
309
70
Lump sums
24
129
958
1
Death beneﬁ ts
1,153
1,104
460
27,969 35,422 27,971
Operating costs
5
10,195
15,705
12,520
Injury prevention costs
1,645
2,640
2,448
Collection costs
4,911
7,179
6,111
Total expenditure 81,712
99,506 64,460
Operating surplus before adjustment to
19,737 17,807 50,813
claims liability
Adjustment to claims liability
23
(2,235)
48,191
10,661
Surplus/(deﬁ cit) from underwriting
21,972 (30,384)
40,152
activities after adjustment to claims
liability
Net investment income
21,310
17,324
35,433
Other income
115
108
114
Net surplus/(deﬁ cit)
43,397
(12,952)
75,699
Account reserve – opening balance
75,821
75,821
122
Net surplus/(deﬁ cit)
43,397
(12,952)
75,699
Transferred to Work Account on
(119,218)
–
–
1 April 2007
Account reserve – closing balance
–
62,869
75,821
Note:
There were payments of $6.9 million relating to work-related injuries to persons who have purchased weekly
compensation under CoverPlus Extra policies from the Self-Employed Work Account and Work Account during the year.
Non-work injuries payment of $6.8 million was paid from the Earners’ and Motor Vehicle Accounts.
31,587 CoverPlus Extra policies were purchased during the year.
Figures for Budget 2007 and Actual 2006 are for the full year.
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
90

Statement of ﬁ nancial performance
and movements in account reserves (equity)
For the nine months to
31 March 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Employers’ Account
Net levy income
Levy income
387,182
464,907
510,995
Total net levy income
387,182
464,907
510,995
Expenditure
Rehabilitation expenditure
Vocational rehabilitation
10,047
13,399
11,310
Social rehabilitation
24
55,391
22,242
(43,714)
Medical treatment
38,908
59,093
51,260
Hospital treatment
17,714
22,206
20,262
Public health acute services
16,159
21,582
18,062
Dental treatment
786
879
938
Conveyance for treatment
2,951
3,739
3,552
Miscellaneous claim costs
336
484
448
142,292 143,624 62,118
Compensation expenditure
Income maintenance
122,843
147,403
142,059
Independence allowances
487
2,085
(62)
Lump sums
24
658
5,796
1,379
Death beneﬁ ts
5,378
5,527
2,582
129,366 160,811 145,958
Operating costs
5
44,657
68,788
55,406
Injury prevention costs
10,596
15,669
14,429
Collection costs
6,895
10,039
9,177
Total expenditure 333,806
398,931
287,088
Operating surplus before adjustment to
53,376 65,976
223,907
claims liability
Adjustment to claims liability
23
69,632
172,852
86,174
(Deﬁ cit)/surplus from underwriting
(16,256)
(106,876)
137,733
activities after adjustment to claims
liability
Net investment income
131,796
103,491
211,217
Other Income
254
400
170
Net surplus/(deﬁ cit)
115,794
(2,985)
349,120
Account reserve – opening balance
756,670 756,670 407,550
Net surplus/(deﬁ cit)
115,794
(2,985)
349,120
Transferred to Work Account on
(872,464)
–
–
1 April 2007
Account reserve – closing balance
–
753,685
756,670
Note:
Figures for Budget 2007 and Actual 2006 are for the full year.
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
91

Statement of ﬁ nancial performance
and movements in account reserves (equity)
For the three months to
30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Work Account
Net levy income
Levy income
150,367
–
–
Total net levy income
150,367
–
–
Expenditure
Rehabilitation expenditure
Vocational rehabilitation
3,946
–
–
Social rehabilitation
24
(312)
–
–
Medical treatment
21,060
–
–
Hospital treatment
6,922
–
–
Public health acute services
5,065
–
–
Dental treatment
372
–
–
Conveyance for treatment
1,028
–
–
Miscellaneous claim costs
135
–
–
38,216
–
–
Compensation expenditure
Income maintenance
50,717
–
–
Independence allowances
530
–
–
Lump sums
24
(28)
–
–
Death beneﬁ ts
1,972
–
–
53,191 –
–
Operating costs
5
17,309
–
–
Injury prevention costs
4,414
–
–
Collection costs
4,723
–
–
Total expenditure 117,853
–
–
Operating surplus before adjustment to
32,514 –
–
claims liability
Adjustment to claims liability
23
(44,975)
–
–
Surplus from underwriting activities
77,489 –
–
after adjustment to claims liability
Net investment income
18,349
–
–
Other Income
244
–
–
Net surplus
96,082
–
–
Account reserve – opening balance
–
–
–
Transferred from Employers’ Account on
872,464 –
–
1 April 2007
Transferred from Self-Employed Work
119,218 –
–
Account on 1 April 2007
Net surplus
96,082
–
–
Account reserve – closing balance
1,087,764
–
–
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
92

Statement of ﬁ nancial performance
and movements in account reserves (equity)
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Treatment Injury Account
Net levy income
Levy income funded by:
Non-Earners’ Account 54,625
53,932 51,989
Earners’ Account
66,764
65,917
63,543
Total net levy income 121,389
119,849 115,532
Expenditure
Rehabilitation expenditure
Vocational rehabilitation
500
521
375
Social rehabilitation
24,851
22,689
17,795
Medical treatment
3,014
2,893
2,383
Hospital treatment
4,245
1,563
2,048
Public health acute services
2,492
2,055
2,022
Dental treatment
146
51
69
Conveyance for treatment
455
274
332
Backdated attendant care
8
(380)
–
380
Miscellaneous claim costs
1,376
1,231
1,644
36,699 31,277 27,048
Compensation expenditure
Income maintenance
15,919
15,832
16,237
Independence allowances
1,975
1,706
1,753
Lump sums
4,385
6,074
2,792
Death beneﬁ ts
1,932
1,429
1,429
24,211 25,041 22,211
Operating costs
5
7,727
8,167
6,659
Injury prevention costs
549
606
614
Total expenditure 69,186
65,091 56,532
Operating surplus before adjustment to
52,203 54,758 59,000
claims liability
Adjustment to claims liability
23
112,470
64,590
129,572
(Deﬁ cit) from underwriting activities
(60,267)
(9,832)
(70,572)
after adjustment to claims liability
Net investment income
47,421
30,735
50,946
Other Income
33
37
–
Net (deﬁ cit)/surplus
(12,813)
20,940
(19,626)
Account reserve – opening balance
(352,145)
(352,145)
(332,519)
(deﬁ cit)
Net (deﬁ cit)/surplus
(12,813)
20,940
(19,626)
Account reserve – closing balance
(364,958)
(331,205)
(352,145)
(deﬁ cit)
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
93

Consolidated statement of ﬁ nancial position
As at 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Account reserves
Residual Claims Account
(1,694,584)
(1,759,813)
(1,881,551)
Motor Vehicle Account
(1,673,226)
(1,548,654)
(1,660,122)
Non-Earners’ Account
(1,484,622)
(1,344,728)
(1,309,256)
Earners’ Account
558,258
457,900
532,469
Self-Employed Work Account
–
62,869 75,821
Employers’ Account
–
753,685 756,670
Work Account
1,087,764
–
–
Treatment Injury Account
(364,958)
(331,205)
(352,145)
Total Account reserves
(3,571,368)
(3,709,946)
(3,838,114)
Subsidiaries reserves
(778)
(1,155)
(1,543)
Revaluation
reserve
15&21
8,244 4,529 4,529
Total reserves (deﬁ cit)
(3,563,902)
(3,706,572)
(3,835,128)
Represented by:
Assets
Bank balances
29,566
16,346
17,649
Receivables
16
631,332 608,420 752,368
Accrued levy income
9
404,230
259,738
326,023
Deferred tax
7
–
271 423
Investments
10
9,726,617 9,061,609 9,033,170
Investment in associate
12
80
38
86
Intangible assets
14
18
17
20
Property, plant and equipment
15
195,640
202,621
182,896
Total assets
10,987,483 10,149,060 10,312,635
Less liabilities
Levy received in advance
13
279,302
328,728 382,706
Payables and accrued liabilities
8&17
536,496
138,380
1,050,146
Deferred tax
7
178
–
–
Claims liability
23
13,735,409
13,388,524
12,714,911
Total liabilities
14,551,385 13,855,632 14,147,763
Net liabilities
(3,563,902)
(3,706,572)
(3,835,128)
For and on behalf of the Board, which authorised the issue of these Financial Statements on
17 August 2007:

Brenda Tahi
Peter Neilson
Board member
Board member
17 August 2007
17 August 2007
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
94

Parent statement of ﬁ nancial position
As at 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Account reserves
Residual Claims Account
(1,694,584)
(1,759,813)
(1,881,551)
Motor Vehicle Account
(1,673,226)
(1,548,654)
(1,660,122)
Non-Earners’ Account
(1,484,622)
(1,344,728)
(1,309,256)
Earners’ Account
558,258
457,900
532,469
Self-Employed Work Account
–
62,869 75,821
Employers’ Account
–
753,685 756,670
Work Account
1,087,764
–
–
Treatment Injury Account
(364,958)
(331,205)
(352,145)
Total Account reserves
(3,571,368)
(3,709,946)
(3,838,114)
Revaluation reserve
15&21
8,244
4,529
4,529
Total reserves (deﬁ cit)
(3,563,124)
(3,705,417)
(3,833,585)
Represented by:
Assets
Bank balances
28,413 15,625 16,960
Receivables
16
631,053 608,365  752,470
Accrued levy income
9
404,230
259,738
326,023
Investments
10
9,726,617 9,060,875  9,033,170
Investment in subsidiaries
11
3,450 3,450 3,450
Property, plant and equipment
15
194,530
200,577
181,498
Total assets
10,988,293 10,148,630  10,313,571
Less liabilities
Levy received in advance
13
279,302
328,728 382,706
Payables and accrued liabilities
8&17
536,706
136,795
1,049,539
Claims liability
23
13,735,409
13,388,524
12,714,911
Total liabilities
14,551,417 13,854,047
14,147,156
Net liabilities
(3,563,124)
(3,705,417)
(3,833,585)
For and on behalf of the Board, which authorised the issue of these Financial Statements on
17 August 2007:

Brenda Tahi
Peter Neilson
Board member
Board member
17 August 2007
17 August 2007
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
95

Consolidated statement of cash ﬂ ows
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Cash ﬂ ows from operating activities
Cash was provided from:
Levy income
3,247,848
2,987,328
3,023,317
Interest 322,372
265,162
287,327
Dividends
121,935 52,875 111,987
Taxation received
–
392
–
Goods and services tax (net)
–
–
18,949
Other income
4,694
4,732
4,696
3,696,849 3,310,489 3,446,276
Cash was applied to:
Payments to injured persons, suppliers
2,716,950 2,740,862 2,542,396
and employees
Goods and services tax (net)
10,756
47,889
–
Taxation paid
1
–
–
2,727,707 2,788,751 2,542,396
Net cash movement from operating
25
969,142 521,738 903,880
activities
Cash ﬂ ows from investing activities
Cash was provided from:
Proceeds from sale of investments
11,655,429
10,415,540
9,039,965
Proceeds from sale of property, plant
430
–
1,904
and equipment
11,655,859 10,415,540 9,041,869
Cash was applied to:
Purchase of investments
12,562,566
10,866,870
9,875,279
Purchase of property, plant and
50,518 71,711 66,710
equipment
12,613,084 10,938,581 9,941,989
Net cash movement from investing
(957,225)
(523,041)
(900,120)
activities
Cash ﬂ ows from ﬁ nancing activities
Net cash movement from ﬁ nancing
–
–
–
activities
Net increase/(decrease) in cash held
11,917
(1,303)
3,760
Bank balance – opening balance
17,649
17,649
13,889
Bank balance – closing balance
29,566
16,346
17,649
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
96

Parent statement of cash ﬂ ows
For the year ended 30 June 2007
$000
Notes
Actual 2007
Budget 2007
Actual 2006
Cash ﬂ ows from operating activities
Cash was provided from:
Levy income
3,247,848
2,987,328
3,023,317
Interest 322,372
265,162
287,327
Dividends
121,935 52,875 111,987
Goods and services tax (net)
–
–
12,727
Other income
2,170
1,740
875
3,694,325 3,307,105 3,436,233
Cash was applied to:
Payments to injured persons, suppliers
2,715,068 2,739,512 2,532,517
and employees
Goods and services tax (net)
10,768
47,845
–
2,725,836 2,787,357 2,532,517
Net cash movement from operating
25
968,489 519,748 903,716
activities
Cash ﬂ ows from investing activities
Cash was provided from:
Proceeds from sale of investments
11,655,429
10,416,274
9,039,965
Proceeds from sale of property, plant
430
–
1,860
and equipment
11,655,859 10,416,274 9,041,825
Cash was applied to:
Purchase of investments
12,562,566
10,866,870
9,875,279
Purchase of property, plant and
50,329 70,487 66,471
equipment
12,612,895 10,937,357 9,941,750
Net cash movement from investing
(957,036)
(521,083)
(899,925)
activities
Cash ﬂ ows from ﬁ nancing activities
Net cash movement from ﬁ nancing
–
–
–
activities
Net increase/(decrease) in cash held
11,453
(1,335)
3,791
Bank balance – opening balance
16,960
16,960
13,169
Bank balance – closing balance
28,413
15,625
16,960
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
97

Statement of commitments
As at 30 June 2007
Consolidated
Parent
$000
Actual 2007
Actual 2006
Actual 2007
Actual 2006
Capital commitments approved
39,831
33,010 39,831
32,975
and contracted
Non-cancellable operating
lease commitments payable:
Not later than one year
11,035
10,116
10,307
9,666
Later than one year but not
10,460 9,982 9,775 9,554
greater than two years
Later than two years but not
21,910 23,896 20,558 22,795
greater than ﬁ ve years
Later than ﬁ ve years
25,409
27,072
23,485
25,670
Total non-cancellable
68,814 71,066 64,125 67,685
operating lease commitments
payable
Total commitments
108,645
104,076 103,956
100,660
The ACC Group leases premises for its branch network and some of its corporate ofﬁ ces. The
annual lease payments are subject to varying terms of review. The amounts disclosed above as
future commitments are based on current rental rates.
At balance date, ACC has made conditional agreement to commit to invest $33.0 million (2006
– $23.9 million) in private equity arrangements.
The Private Equity portfolio includes investments in several venture capital/private equity funds.
ACC has committed to invest up to a total of $65.8 million (2006 – $43.0 million) in these funds.
Investors do not invest upfront. Instead, these funds make calls on investors when additional
money is required for investments and/or management fees over a period of up to ten years. As
at 30 June 2007, ACC had undrawn commitments to these funds totalling $33.0 million.
Prior to 30 June 2007, ACC entered an agreement to buy IBA Health Limited shares in a placement
amounted to NZ$4.0 million (A$3.7 million). The placement was subject to shareholder approval
in July 2007.
As at 30 June 2007, ACC had a capital commitment of $1.66 million in respect of an additional
investment in the Fashion Island Papamoa property.
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
98

Statement of contingent liabilities and assets
There are several legal actions against ACC in existence, arising in the main from challenges to
operational decisions made by ACC. No accrual has been made for these contingent liabilities as
ACC will be vigorously defending these claims.
The estimated contingent liabilities of these actions are as follows:
As at 30 June 2007
Consolidated
Parent
$000
Actual 2007
Actual 2006
Actual 2007
Actual 2006
Legal proceedings
47
330
47
330
Other contingent liabilities
–
7,000
–
7,000
Total contingent liabilities
47
7,330 47
7,330
In addition to the above litigation and claims, there is appeal litigation in progress as a
consequence of ACC claimants appealing a review ofﬁ cer’s decision to the District Court. While
an estimate of the ﬁ nancial effect of outstanding appeals cannot be made, management believes
the resolution of outstanding appeals will not have a materially adverse effect on the ﬁ nancial
statements of ACC.
The estimated contingent assets are as follows:
As at 30 June 2007
Consolidated
Parent
$000
Actual 2007
Actual 2006
Actual 2007
Actual 2006
Legal
proceedings
400 387 400 387
Total contingent assets
400 387 400 387
There is a statutory demand related to a claim for the reimbursement of overpayments made
by ACC.
The above statement is to be read in conjunction with the accounting policies on pages 75 to 82 and the Notes on pages 100 to 121.
99

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
1. Net levy income
Net levy income consists of the following:
Consolidated and Parent
$000
2007
2006
Levy income
3,302,264
3,089,412
Less:
Levy debts written off
(8,573)
(4,913)
Increase in the provision for doubtful debts for levy debtors
(3,396)
(9,001)
Net levy income
3,290,295
3,075,498
2. Net investment income
Net investment income consists of the following:
Consolidated and Parent
$000
2007
2006
Dividends received
121,546
113,606
Interest received
330,850
288,499
Net realised and unrealised gains
366,930
681,315
Total investment income
819,326 1,083,420
Less:
Investment expense
(17,618)
(13,333)
Net investment income
801,708
1,070,087
Included in net realised and unrealised gains are net foreign exchange losses of $225.8 million
(2006 – net foreign exchange losses of $112.0 million).
3. Other income
Consolidated
Parent
$000
2007
2006
2007
2006
Sales from rendering of
3,333
3,775
–
–
services by subsidiaries
Equity accounted earnings
34
94
–
–
from associate
Other income
1,321
875
2,170
875
Other income
4,688
4,744
2,170
875
4. Total operating revenue
Consolidated
Parent
$000
2007
2006
2007
2006
Levy income
3,302,264
3,089,412
3,302,264
3,089,412
Investment income
819,326
1,083,420
819,326
1,083,420
Other income
4,688
4,744
2,170
875
Total operating revenue
4,126,278
4,177,576
4,123,760
4,173,707
100

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
5. Operating costs
Consolidated
Parent
$000
2007
2006
2007
2006
Operating costs include:
External audit fees
488
277
500
265
Fees paid to external auditor
68 133  68 133
for other services
Directors’ fees
368
362
282
274
Rental of ofﬁ ce premises
10,981
10,366
10,828
10,280
Depreciation:
–
Buildings
218 202  218 202
– Freehold improvements
460
371
460
371
– Leasehold improvements
2,804
2,521
2,791
2,508
– Furniture, ﬁ ttings and
2,983 2,353 2,921 2,294
equipment
– Computer equipment
29,348
23,965
28,946
23,560
– Motor vehicles
516
520
516
520
Property, plant and equipment
write-offs/(reversal):
– Computer equipment
–
(204)
–
(204)
Amortisation of intangible
2 2 –
–
assets
Operating lease equipment
22 37 13  9
rentals
Bad debts written off
6
2
6
2
Change in provision for
(10)
13 (10)
13
doubtful debts
Personnel expenditure
148,664
140,291
142,604
134,917
Supplies and services
90,420
88,316
95,834
90,439
287,338 269,527 285,977 265,583
Restructuring costs
316
794
316
794
Operating costs
287,654
270,321
286,293
266,377
Operating costs are allocated
to:(i)
Residual Claims Account
24,049
25,572
Motor Vehicle Account
30,939
30,900
Non-Earners’ Account
40,933
37,826
Earners’ Account
110,484
97,494
Self-Employed Work Account
10,195
12,520
Employers’ Account
44,657
55,406
Work Account
17,309
–
Treatment Injury Account
7,727
6,659
Operating costs
286,293
266,377
Audit fees for the Group are paid for by ACC. Audit fees accrued in 2006 by Catalyst Risk
Management Limited was reversed this year as this was paid for by ACC.
Personnel expenditure includes salaries, superannuation, ACC levies paid and accrued
holiday pay.
i.
Costs were allocated to Accounts for 2007 using a similar activity-based costing methodology as used for 2006.
101

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
6. Income tax expense/(credit)
Consolidated
$000
2007
2006
Surplus before tax
267,903
330,164
Add/(less) permanent differences:
Parent net surplus
(266,746)
(330,239)
Equity accounted earnings from associate
(34)
(94)
Amortisation of intangible assets
3
2
Non-deductible expenses
4
4
Accounting surplus/(deﬁ cit) subject to tax
1,130
(163)
Income tax at 33%
373
(54)
Under provision prior years
19
2
Income tax expense/(credit)
392
(52)
The income tax expense/(credit) is represented by:
Current tax
(209)
(38)
Deferred tax
601
(14)
392 (52)
7. Deferred taxation liability/(asset)
Consolidated
$000
2007
2006
Balance at beginning of the year
(423)
(409)
Transfer from/(to) Statement of Financial Performance
601
(14)
Balance at end of the year
178
(423)
8. Provisions
a) Backdated attendant care
Consolidated and Parent
$000
2007
2006
Opening balance
7,951
11,015
Paid out during the year
(5,453)
(8,398)
Additional provision made during the year
–
5,334
Reversal of unused provision
(2,498)
–
Closing balance
–
7,951
A liability for backdated attendant care arose from a decision of the High Court relating to
entitlements for periods prior to 1992. The Court found that ACC claimants requiring constant
personal attention under the 1972 and 1982 legislation, were entitled to 24 hour attendant care
from the date of their discharge from hospital as opposed to a lesser level of beneﬁ ts actually
paid by ACC. Included in this is also a liability for attendant care arrears.
Backdated attendant care payments are now included in the claims liability valuation. A separate
provision for backdated attendant care payments is therefore no longer required.
102

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
b) Restructuring
Consolidated and Parent
$000
2007
2006
Opening balance
420
–
Provision made during the year
– 794
Paid out during the year
(254)
(374)
Reversal of unused provision
(127)
–
Closing balance
39
420
There was a review last year of ACC’s senior management structure which resulted in the
development of one that is more closely aligned with the core functions of ACC and the Board’s
strategic goals. The new structure has positioned the senior leadership team of ACC to more
effectively and efﬁ ciently manage the business and its challenges as ACC moves forward. This
restructuring was largely completed this year, but has also impacted on other parts of the
organisation. Additional redundancies have therefore been provided accordingly this year.
9. Accrued levy income
As stated in the Statement of Accounting Policies, all levy income is recognised in the period to
which it relates.
Levy income was therefore accrued to 30 June 2007 in the following Accounts:
Consolidated and Parent
$000
2007
2006
Residual Claims Account
261,073
212,097
Earners’ Account
98,412
73,640
Employers’ Account
–
14,913
Self-Employed Work Account
–
25,373
Work Account
44,745
–
404,230
326,023
103

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
10. Investments
ACC holds investments to meet the liquidity and reserve requirements of each Account as follows:
Consolidated and Parent
$000
2007
2006
New Zealand deposits at call
849,783
1,329,052
New Zealand government securities
1,360,711
1,187,262
New Zealand equities
1,163,371
1,056,212
Australian equities
1,071,890
882,670
Australian deposits at call
46,451
19,441
New Zealand discounted securities
728,378
994,942
Other New Zealand ﬁ xed interest securities
2,294,404
1,541,280
Overseas ﬁ xed interest securities
263,715
213,553
Other overseas equities
1,871,139
1,783,886
Other overseas deposits at call
28,537
36,917
Direct property
21,880
4,635
Foreign Currency Hedging
26,358
(16,680)
9,726,617
9,033,170
Included within the above investment asset classes are $6.6 million (2006 – $12.5 million) of
New Zealand equities and $128.8 million (2006 – $710.0 million) of New Zealand government
securities investments which are subject to fully collateralised security lending transactions.
Cash collateral received in these transactions is invested, and the liability to repurchase the
investments is accrued in unsettled investment transactions.
Direct property comprises of two investment properties that are leased to third parties:
a) Radius St Joan Hospital
The investment property was valued at $5.1 million on 30 June 2007 (2006 – $4.5 million)
by Michael Nimot, a member of the New Zealand Institute of Valuers (Inc.), and an
independent valuer of the ﬁ rm Barker & Morse Ltd. The property was valued at market
value less the estimated cost of disposal.
b) Fashion Island Papamoa
The investment property was valued at $16.8 million on 30 June 2007 (after an allowance of
$1.25 million for one vacant unit) by Glenn Attewell, a member of the New Zealand Institute
of Valuers (Inc.), and an independent valuer of the ﬁ rm Darroch Valuations Waikato. The
property was valued under the discounted cash ﬂ ow approach, which indicates an initial
yield of 7.43% on the initial cash ﬂ ow inclusive of vacancies.
11. Investment in subsidiaries
Parent
$000
2007
2006
Balance
Date
Catalyst Risk Management Limited
2,600
2,600
30 June
Dispute Resolution Services Limited
850
850
30 June
3,450
3,450
Catalyst Risk Management Limited is an injury management company providing recovery and
rehabilitation management services.
104

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
Dispute Resolution Services Limited is a company providing personal injury review and
mediation services.
These companies are wholly owned subsidiaries of ACC.
12. Investment in associate
Consolidated
$000
2007
2006
Share of surplus before tax
56
141
Income tax
22
47
Share of surplus after tax
34
94
Share of dividend paid
(40)
(46)
Share of retained surplus
(6)
48
Carrying amount at beginning of the year
86
38
Carrying amount at end of the year
80
86
Consolidated
Carrying Amount
Percentage Held
Balance
2007
2006
Acquired
2007
2006
Date
$000
$000
Associate:
Impac Services Limited
1 July 2004
20%
20%
31 March
80
86
13. Levy received in advance
Consolidated and Parent
$000
2007
2006
Motor Vehicle Account
147,696
158,776
Earners’ Account
9,850
10,012
Employers’ Account
–
191,493
Self-Employed Work Account
–
22,425
Work Account
121,756
–
279,302
382,706
Motor Vehicle Account levy and residual levy from motor vehicle relicensing are for a period of
one month to one year in advance.
14. Intangible assets
Consolidated
$000
2007
2006
Intellectual Property
Cost
25 25
Accumulated amortisation
(7)
(5)
18 20
105

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
15. Property, plant and equipment
Consolidated
Parent
$000
2007
2006
2007
2006
Freehold land at valuation
5,136 3,846  5,136 3,846
Buildings
at
valuation
10,286 8,144
10,286 8,144
Accumulated depreciation
(2,253)
(1,552)
(2,253)
(1,552)
8,033 6,592 8,033 6,592
Freehold improvements at
7,235 5,216  7,235 5,216
valuation
Accumulated depreciation
(4,951)
(3,265)
(4,951)
(3,265)
2,284 1,951 2,284 1,951
Leasehold improvements at
25,253 24,687 24,936 24,359
cost
Accumulated depreciation
(14,521)
(12,011)
(14,245)
(11,747)
10,732 12,676 10,691 12,612
Furniture, ﬁ ttings and
26,162 25,852  25,572 25,339
equipment at cost
Accumulated depreciation
(23,206)
(21,799)
(22,749)
(21,398)
2,956 4,053 2,823 3,941
Computer equipment at cost
280,616
191,773
276,760 188,063
Accumulated depreciation
(152,192)
(125,915)
(150,272)
(124,385)
Accumulated impairment
(1,000)
(1,000)
–
–
127,424 64,858 126,488  63,678
Motor vehicles at cost
5,004
4,668
5,004
4,668
Accumulated depreciation
(2,664)
(2,474)
(2,664)
(2,474)
2,340 2,194 2,340 2,194
Work in progress at cost
Leasehold improvements
1,098
–
1,098
–
Computer equipment
35,637
86,726
35,637
86,684
36,735 86,726  36,735 86,684
195,640 182,896  194,530  181,498
Note:
ACC owns two freehold properties, Shamrock House valued in June 2007 at a market value of $15.0 million ($12.1 million
in June 2006), and Greymouth House revalued for the ﬁ rst time in June 2007 at market value of $395,000. ACC holds
its freehold premises as capital assets for long term ownership, not as investment properties. The valuations were
completed by CB Richard Ellis Limited and Coast Valuations Limited respectively. Both are independent registered public
valuers. The investment value approach was used as the basis of the valuations.
Impairment
The carrying amounts of all property, plant and equipment are reviewed on an ongoing basis. Any
impairments in value are recognised immediately. There were no impairment losses recognised
(or reversed) in the Statement of Financial Performance for the year nor in the previous year.
106

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
16. Receivables
Consolidated
Parent
$000
2007
2006
2007
2006
Residual Claims debtors(i)
423 386 423 386
Provision for doubtful debts
(423)
(386)
(423)
(386)
–
–
–
–
Self-Employed debtors(i)
124,967 96,736 124,967 96,736
Provision for doubtful debts
(31,577)
(27,811)
(31,577)
(27,811)
93,390 68,925 93,390 68,925
Employers debtors(i)
462,066 556,122 462,066 556,122
Provision for doubtful debts
(29,612)
(30,020)
(29,612)
(30,020)
432,454 526,102 432,454 526,102
Claimant debtors(ii)
10,876 12,075 10,876 12,075
Provision for doubtful debts
(10,872)
(12,074)
(10,872)
(12,074)
4 1 4 1
PAYE receivable(iii)
3,355 3,129 3,355 3,129
Provision for doubtful debts
(465)
(1,096)
(465)
(1,096)
2,890 2,033 2,890 2,033
Motor Vehicle levy receivable(iv)
21,124 34,011 21,124 34,011
Non-Earners’ appropriation
8,856 13,200  8,856 13,200
Levies underpaid by Inland
–
12,066 –
12,066
Revenue
Unsettled investment
14,639 39,270 14,639 39,270
transactions
Dividends receivable and
4,086 4,475 4,086 4,475
accrued
Interest receivable and accrued
43,942
35,464
43,942
35,464
Prepayments
7,270 6,616  7,259 6,606
Tax refund due
641
431
–
–
Intercompany receivables
–
–
165
223
Advances to subsidiaries
–
–
800
1,050
Sundry debtors
2,036
9,774
1,444
9,044
631,332 752,368  631,053  752,470
Note:
i.
The changes in the provisions for doubtful debts for the levy debtors have been charged against levy income. Because
of the amount involved, charging against operating costs may result in distortion of this cost. Levy debtors have been
invoiced based on liable earnings data provided from Inland Revenue sources.
ii. Claimant
debt results when an overpayment has been recognised and is unable to be immediately repaid.
iii.  PAYE receivable represents PAYE on claimant payments subsequently reversed. In most cases this amount is
collectable from Inland Revenue.
iv.  Motor vehicle levy receivable consists of the amount collected by Land Transport NZ from motor licensing and the
balance that is due to ACC after month end and the amount collected by NZ Customs for the ACC levy portion of the
excise duty on petrol and the balance that is due to ACC in the ﬁ rst week of the following month.
In addition to the above there are levies outstanding from motor vehicle owners. Land Transport
NZ, in its capacity as collecting agent for ACC from motor vehicle owners, estimates this to
be approximately $13.1 million (2006 – $31.7 million). As ACC is not able to determine the
collectability of these levies no accrual has been made.
107

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
17. Payables and accrued liabilities
Consolidated
Parent
$000
2007
2006
2007
2006
Unsettled investment
164,749
770,000
164,749
770,000
transactions
PAYE and earnings related
8,604
8,730
8,575
8,729
deductions
Claims expenditure accrued
193,439
111,986
193,439
111,986
and payable
Occupational safety and health
13,403
14,917
13,403
14,917
Sundry creditors
393
620
393
605
Levies overpaid by Inland
63,615
22,984
63,615
22,984
Revenue
Intercompany payables
–
–
1,757
632
Goods and services tax
37,133
47,889
37,077
47,844
Accrued employee entitlements
12,391
11,001
11,841
10,531
Other accrued expenditure
42,730
53,648
41,818
52,940
Provision for backdated
–
7,951
–
7,951
attendant care (refer to note
8a)
Provision for restructuring
39
420
39
420
(refer to note 8b)
536,496
1,050,146
536,706
1,049,539
18. Financial instruments
a) Interest rate management
ACC has investment assets totalling $9,623.9 million (2006 – $8,342.9 million) as at
30 June 2007. This comprises $443.0 million (2006 – $409.4 million) operational cash and a
total reserves portfolio of $9,180.9 million (2006 – $7,933.5 million). The operational cash is
used to meet liquidity requirements. The total reserves portfolio’s principal assets are bonds
and equities. The interest rate exposures of the total reserves and operational cash portfolios
are managed primarily through asset allocation between asset class sub-portfolios and through
selection of physical securities within asset class sub-portfolios. Derivative ﬁ nancial instruments
may also be used to manage the interest rate exposures of the reserves and cash portfolios.
The Board has delegated the responsibility for the management of interest rate risk to the
Investment Committee which has considered this risk relative to the interest rate exposures
inherent in the claims liability of each funding Account. The Investment Committee has set out
investment guidelines for each of the ﬁ xed interest portfolios including the use of derivatives.
The exposure of each of the ﬁ xed interest portfolios is measured by comparing the duration of
each portfolio against the selected benchmark index duration.
108

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
The weighted average effective interest rates for all classes of investments are as follows:
2007
2006
%
%
New Zealand deposits at call
8.05
7.30
New Zealand government securities
6.05
5.30
New Zealand discounted securities
8.22
7.42
Other New Zealand ﬁ xed interest securities
8.36
7.28
Overseas ﬁ xed interest securities
7.95
9.05
At balance date the principal or contract amounts of interest rate swaps outstanding were:
Consolidated and Parent
$000
2007
2006
Interest rate swaps
2,616,050
1,266,850
The estimated cash settlement (outﬂ ow)/inﬂ ow required for these instruments, based on market
valuations at 30 June is:
Consolidated and Parent
$000
2007
2006
Interest rate swaps
(91,436)
(2,628)
b) Currency risk management
Part of the reserves portfolio is invested in overseas ﬁ xed interest and equity markets, which
total $3,218.7 million as at 30 June 2007 (2006 – $2,936.5 million). Forward currency agreements
are used to create partial economic hedges for the foreign currency exposure.
The Investment Committee has delegated the responsibility for the currency management to
the Investment Unit, which manages foreign currency exposure of each reserves portfolio. The
Investment Committee has set out investment guidelines on the management of currency risk.
During the year an average of 38% (2006 – 38%) of the overseas currency exposure was hedged
to New Zealand dollars.
The contract amounts outstanding at 30 June are as follows:
Consolidated and Parent
$000
2007
2006
Forward exchange contracts
1,274,573
1,119,135
The estimated cash settlement (outﬂ ow)/inﬂ ow required for these instruments, based on market
valuations at 30 June is:
Consolidated and Parent
$000
2007
2006
Forward exchange contracts
26,358
(16,680)
109

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
c) Repricing analysis
The following table identiﬁ es the products in which ﬁ nancial instruments that are subject to
interest rate risk re-price. The effective interest rate incorporates the effect of the relevant
derivative contracts.
2007
Effective
Greater
Consolidated and Parent
Interest
Less than
Between
Between
than 5
$000
Rate
Total
1 year
1–2 years
2–5 years
years
Investments
New Zealand government
6.05%
1,360,711
–
–
–
1,360,711
securities
New Zealand deposits at call
8.05%
849,783
849,783
–
–
–
New Zealand discounted
8.22%
728,378
728,378
–
–
–
securities
Other New Zealand ﬁ xed
8.36%
2,294,404
1,601,296
24,178
124,699
544,231
interest securities
Overseas ﬁ xed interest
7.95%
263,715
2,390
603
4,591
256,131
securities
5,496,991
3,181,847
24,781
129,290
2,161,073
2006
Effective
Greater
Consolidated and Parent
Interest
Less than
Between
Between
than 5
$000
Rate
Total
1 year
1–2 years
2–5 years
years
Investments
New Zealand government
5.30%
1,187,262
–
–
2,636
1,184,626
securities
New Zealand deposits at call
7.30%
1,329,052
1,329,052
–
–
–
New Zealand discounted
7.42%
994,942
994,942
–
–
–
securities
Other New Zealand ﬁ xed
7.28%
1,541,280
558,407
30,796
224,914
727,163
interest securities
Overseas ﬁ xed interest
9.05%
213,553
7,703
492
3,691
201,667
securities
5,266,089
2,890,104
31,288
231,241
2,113,456
d) Credit risk
To the extent ACC has a receivable from another party there is a credit risk in the event of non-
performance by that counterparty. Financial instruments that potentially subject ACC to credit risk
principally consist of bank balances, receivables, investments in government securities, foreign
currency forward exchange contracts, swaps, options and forward rate agreements.
The Investment Committee has approved a list of selected counterparties and assigned
investment limits based on credit ratings assigned to issuers by Standards and Poors. Credit risk
exposure is monitored on a continuous basis and ACC does not anticipate non-performance by
the counterparties.
110

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
Signiﬁ cant concentrations of credit risk are held in the following:
Consolidated
Parent
$000
2007
2006
2007
2006
1. Bank balances
29,566
17,649
28,413
16,960
2. Receivables
631,332
752,368
631,053
752,470
3. New Zealand government
1,360,711
1,187,262
1,360,711
1,187,262
securities
4. Major New Zealand ﬁ nancial
institutions in call deposits,
negotiable certiﬁ cates
of deposits and bonds
maturing:
– in less than three months
1,029,438
1,474,655
1,029,438
1,474,655
–in more than three months
31,576
160,553
31,576
160,553
The highest amount with one institution is $395.3 million (2006 – $244.9 million).
All investments are marked to market; fair value is equal to carrying value.
e) Equity market derivatives
Part of the Australian equity portfolio may be invested in Australian equity put options. Australian
equity options are used to partially hedge potential declines in the Australian equity market.
The put option matured in December 2006 and has zero value as at 30 June 2007 (2006 – $3.8
million).
f) Fair values
The following methods and assumptions were used to estimate the fair value of each class of
ﬁ nancial instrument:
Bank Balances, Receivables, Payables
The carrying value of these items is equivalent to their fair value.
Investments
The fair value of the investments is equivalent to their carrying value.
Derivatives
The fair value of the derivatives is equivalent to their carrying value.
19. Segmental reporting
ACC operates in New Zealand and predominantly in one industry, that of insurance-based
accident rehabilitation and compensation.
111

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
20. Related party transactions
ACC as a Crown entity enters into a number of transactions with other government departments,
Crown agencies and state-owned enterprises on an arm’s-length basis where those parties are
acting in the course of their normal dealing with ACC. Because these transactions are entered
into on an arm’s-length basis, they are not considered to be related party transactions.
All transactions between ACC and the companies within the Group are conducted on an arm’s-
length basis.
During the year ACC purchased services from the Group companies totalling $8.1 million (2006
– $5.3 million). The amount outstanding at balance date was $0.7 million (2006 – $0.6 million).
Sales to the Group companies by ACC for its services totalled $0.8 million (2006 – $0.9 million).
The amount outstanding at balance date was $0.2 million (2006 – $0.2 million).
ACC provided additional advances to its Group companies during the year. The amount
outstanding at balance date was $0.8 million (2006 – $1.1 million).
Trade amounts owing between related parties are payable under normal commercial terms. No
related party debts have been written off or forgiven during the year.
21. Asset revaluation reserves
Consolidated and Parent
$000
2007
2006
Land Revaluation Reserve
Balance at the beginning of the year
2,878
2,085
Revaluation increase
1,243
793
Balance at the end of the year
4,121
2,878
Building Revaluation Reserve
Balance at the beginning of the year
1,651
536
Revaluation increase
2,472
1,115
Balance at the end of the year
4,123
1,651
8,244 4,529
22. Reinsurance
ACC has no catastrophe re-insurance as the cost to fully place the cover is assessed as not in line
with the risk.
Catastrophe re-insurance will be reconsidered if and when this can be achieved at a reasonable
cost.
112

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
23. Claims liability
Future expenditure commitments exist in respect of:
1. Claims notiﬁ ed and accepted in the current and previous years, but which will not be fully
met until future years; and
2. Claims incurred but not notiﬁ ed to, or accepted by, ACC at balance date.
An independent actuarial estimate by PricewaterhouseCoopers Actuarial Pty Ltd, consulting
actuaries of Sydney, led by Noeline Woof, has been made of the future expenditure relating to
accidents which occurred prior to balance date, whether or not the claims have been reported to
or accepted, by ACC. Noeline Woof is a Fellow of the Institute of Actuaries of Australia and Fellow
of the New Zealand Society of Actuaries.
The actuarial estimate has been made based on actual experience to 30 June 2007 for non-fatal
income maintenance and actual experience to 31 March 2007 for all other payment types. The
calculation of the outstanding claims liability has been made in accordance with the standards of
the New Zealand Society of Actuaries and Financial Reporting Standard 35.
In determining the actuarial estimate, the independent actuaries have relied upon information
supplied by ACC. As there is overall satisfaction as to the nature, sufﬁ ciency and accuracy
of the information provided, no independent veriﬁ cation was required. However, a review of
reasonableness and consistency of the data was undertaken where possible. This review did not
identify any material inconsistencies or deﬁ ciencies in the data.
The following table shows the actuarial estimate of the present value of the claims liability that
will be payable in future years. The actual outcome is likely to range about this estimate and, like
any such forecast, is subject to uncertainty.
The main long term assumptions used in the above estimates for discounting to present values
are:
2007 % p.a.
2006
Year 1
Years 2+
% p.a.
1. Interest rate for discounting (weighted average
6.61%
6.61%
5.83%
rate of government stock)
2. Inﬂ ation rates:
– weekly compensation
3.8%
3.4%
3.3%
– impairment beneﬁ ts
2.9%
2.3%
2.8%
– rehabilitation and other beneﬁ ts(i)
3.0%
2.6%
2.5%
– medical costs(ii)
3.0%
2.6%
2.5%
3. Allowance for claims handling expenses
n/a
n/a
n/a
(as a proportion of liabilities)(iii)
i.
Social rehabilitation for serious injury claims (which represents around 50% of rehabilitation liability) has an
allowance for superimposed inﬂ ation of 5.0% p.a. over the next ﬁ ve years and 1.0% thereafter. Non-serious injury
social rehabilitation also includes an allowance for superimposed inﬂ ation which is 12.0% initially and reduces to
4.0% over three years. Hospital rehabilitation costs include an allowance for superimposed inﬂ ation of 6.0% p.a. for
three years and then 1.0% p.a. long term.
ii. Medical cost inﬂ ation includes an explicit allowance for superimposed inﬂ ation of approximately 6.0% p.a. for three
years, which then reduces to 2.5% p.a. long term.
iii. The claims handling expense allowance is now calculated as an explicit amount rather than as a proportion of the
claims liability.
113

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
Superimposed inﬂ ation is the increase in the cost of claims that is above general inﬂ ation. This is
due to other inﬂ uencing factors such as new medical treatment being available.
A key assumption, which has ﬁ nancial signiﬁ cance, is the superimposed inﬂ ation for social
rehabilitation for serious injury claims. If superimposed inﬂ ation is assumed to be 0% after ﬁ ve
years instead of 1.0% thereafter, this will decrease the claims liability by $442 million. If it is
assumed to be 2.0%, this will increase the claims liability by $481 million.
The claims liability valuation also does not make any speciﬁ c allowances for increase in regulated
and contracted rates paid for treatment and rehabilitation services in excess of standard wage
inﬂ ation.
Claims liability (discounted)
Self-
30 June
Residual
Motor
Non-
Employed
Treatment
30 June
As at 30 June 2007
2007
Claims
Vehicle
Earners’
Earners’
Work
Employers’
Work
Injury
2006
$million
Total
Account
Account
Account
Account
Account
Account
Account
Account
Total
Rehabilitation
Medical treatment
928
156
131
234
247
–
–
124
36
962
Miscellaneous
6,345
1,061
2,144
1,520
808
–
–
247
565
5,550
7,273
1,217
2,275
1,754
1,055
–
–
371
601
6,512
Compensation
Income maintenance
4,703
1,206
1,266
174
1,124
–
–
744
189
4,608
Impairment beneﬁ ts
836
90
133
369
135
–
–
58
51
723
5,539
1,296
1,399
543
1,259
–
–
802
240
5,331
Present value of the claims
12,812
2,513
3,674
2,297
2,314
–
–
1,173
841
11,843
liability
Present value of the operating
904
254
287
90
135
–
–
93
45
854
costs of meeting these claims
Bulk billed costs
19
–
3
11
4
–
–
1
–
18
Total present value of the
13,735
2,767
3,964
2,398
2,453
–
–
1,267
886
12,715
claims liability (as at 30 June
2007)
As at 30 June 2006
12,715
2,848
3,554
2,074
2,222
255
989
-
773
11,384
(Discounted to 30 June 2006)
Transferred between Accounts
–
–
–
–
–
(253)
(1,059)
1,312
–
–
Transferred from Other
–
–
–
–
–
–
–
–
–
10
Insurers
Movement during the year
1,020
(81)
410
324
231
(2)
70
(45)
113
1,321
114

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
Maturity proﬁ le1
Self-
30 June
Residual
Motor
Non-
Employed
Treatment
30 June
As at 30 June 2007
2007
Claims
Vehicle
Earners’
Earners’
Work
Employers’
Work
Injury
2006
$million
Total
Account
Account
Account
Account
Account
Account
Account
Account
Total
Within one year
1,686
313
316
267
461
–
–
266
63
1,505
Later than one year but not
1,188
261
278
176
258
–
–
157
58
1,048
later than two years
Later than two years but not
2,587
616
674
375
489
–
–
295
138
2,419
later than ﬁ ve years
Later than ﬁ ve years but not
2,896
688
840
451
490
–
–
258
169
2,687
later than ten years
Later than ten years
5,378
889
1,856
1,129
755
–
–
291
458
5,056
Total present value of the
13,735
2,767
3,964
2,398
2,453
–
–
1,267
886
12,715
claims liability
1 Includes claims handling expenses.
Analysis of changes
Self-
30 June
Residual
Motor
Non-
Employed
Treatment
30 June
2007
Claims
Vehicle
Earners’
Earners’
Work
Employers’
Work
Injury
2006
$million
Total
Account
Account
Account
Account
Account
Account
Account
Account
Total
Opening gross liability
30,528
5,439
9,328
6,312 4,522  455  1,615
–
2,857
26,436
Payments in respect of prior
(1,655)
(338)
(319)
(258)
(414)
(42)
(166)
(51)
(67)
(1,389)
years
Change in prior year estimates(i)
6,326 362
2,435
2,083 380 (131)
(351)
425
1,123
2,655
Current year claims(ii)
3,468 124 780 627 986  74 337 170 370
2,826
Transfer between Accounts
–
–
–
–
–
(356)
(1,435)
1,791
–
–
Closing gross liability
38,667
5,587
12,224 8,764  5,474
–
–
2,335 4,283
30,528
Discounted at 2006 interest
14,902 2,949  4,353 2,654 2,618
–
–
1,332  996 12,819
rate(iii)
Effect of change in interest
(1,167)
(182)
(389)
(256)
(165)
–
–
(65)
(110)
(104)
rate
Closing discounted liability
13,735
2,767
3,964
2,398
2,453
–
–
1,267
886
12,715
i.
Changes to the estimated value of future payments to reﬂ ect the experience of the Scheme in 2006/2007 for accidents incurred prior to July 2006.
These estimates have changed due to experience being worse than expected.
ii.   Estimated value of future payments for accidents incurred between July 2006 and June 2007.
iii.  The actuarial estimate is calculated by discounting the expected future payments to their present value. A ‘fully funded’ Scheme would hold assets
equal to the discounted liability value.
115

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
Levy deﬁ ciency
Unexpired risk represents any deﬁ ciency of levy income in respect of policies in force at balance
date through to the next renewal date of such policies. A deﬁ ciency exists where future levies
are exceeded by expected claims and expenses. Where a levy deﬁ ciency exists, any deferred
acquisition costs are ﬁ rst written down to zero.
At 30 June 2007, ACC has projected a levy deﬁ ciency of $103.9 million (2006 – $nil) for current
in-force business until the next levy renewal on 1 April 2008. Under FRS 35: Financial Reporting
of Insurance Activities, no provision is required to be recognised for this unexpired risk. However,
deferred acquisition costs must be fully written down to the extent of any levy deﬁ ciency. At 30
June 2007, deferred acquisition costs were valued at $ nil (2006 – $nil). Therefore, no write down
has occurred.
24. Claims arising from work-related gradual process, disease or infection
(“WRGPDI” claims)
An amendment to the Act, which took effect from 1 July 2005, requires that all WRGPDI claims
should be allocated to an Account or Accounts on the basis of the status of the claimant during
the period of exposure rather than the date of the claim lodgement.
As a result, claim costs of $18.8 million and $67.4 million were transferred from the Self-
Employed Work Account and Employers’ Account respectively to the Residual Claims Account in
2006.
A Crown Law opinion was requested this year to clarify the treatment of WRGPDI claims reported
prior to the effective date of the amendment, that is, whether or not the amendment was
retrospective. The advice from Crown Law was that payments made up until the effective date of
the amendment should be funded according to the original wording of the Act and subsequent
payments according to the amendment.
As a result, the following transfers of claims costs between Accounts were made this year which
included adjustments to the transfers made last year:
Social
$000
rehabilitation
Lump sums
Claims costs transfer in (out) of:
Residual Claims Account
(32,032)
2,326
Non-Earners’ Account
(317)
9,542
Self-Employed Work Account
8,974
(1,814)
Employers’ Account
29,983
(8,831)
Work Account
(6,608)
(1,223)
116

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
25. Cash ﬂ ows
Reconciliation of net cash inﬂ ow from operating activities with the reported net surplus
Consolidated
Parent
$000
Actual 2007
Budget 2007
Actual 2006
Actual 2007
Budget 2007
Actual 2006
Net surplus after taxation
267,511 128,556 330,216 266,746 128,168 330,239
Add/(less) items classiﬁ ed as
investing activities
Gain on sale of ﬁ xed assets
–
–
(165)
–
–
(164)
Realised gains on sale of
(657,621)
(595,000)
(104,699)
(657,621)
(595,000)
(104,699)
investments
Add/(less) non-cash items
Depreciation
36,329 51,989 29,932 35,852 51,408 29,455
Offshore income re-invested
62,052 62,000 49,583 62,052 62,000 49,583
Provision for restructuring costs
39
–
420 39 –
420
(Decrease)/increase in
(2,498)
–
5,334 (2,498)
–
5,334
backdated attendant care
provision
Levy debts written off
8,573
–
4,913 8,573
–
4,913
Increase in doubtful debts for
3,396
–
9,001 3,396
–
9,001
levy debtors
Property, plant and equipment
–
–
(204)
–
–
(204)
writeoffs/(reversal)
Amortisation of intangible
2
–
2
–
–
–
assets
Movement in deferred tax
601
152
(14)
–
–
–
Adjustment to claims liability
1,020,498
673,613
1,321,069
1,020,498
673,613
1,321,069
Add/(less) movements in
working capital items
In accounts receivable
6,234
171,509
(113,385)
6,609
171,618
(113,206)
In accounts payable and accrued
98,791 (141,765)
(17,863)
99,608 (142,743)
(17,765)
liabilities
In levies received in advance
(103,404)
(53,978)
15,939
(103,404)
(53,978)
15,939
Add/(less) net adjustments to
228,639 224,662 (626,199)
228,639 224,662 (626,199)
investments for market values
and accrued income
Net cash inﬂ ow from operating
969,142 521,738 903,880 968,489 519,748 903,716
activities
117

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
26. Impact of adopting New Zealand equivalents to International Financial
Reporting Standards
Adoption of International Financial Reporting Standards
In December 2002 the New Zealand Accounting Standards Review Board announced that
International Financial Reporting Standards (“IFRS”) will apply to all New Zealand entities for
periods commencing on or after 1 January 2007. Certain adaptations have been made to reﬂ ect
New Zealand circumstances for issue as New Zealand equivalents to International Financial
Reporting Standards (“NZ IFRS”); including exemptions for public beneﬁ t entities.
ACC considers itself a public beneﬁ t entity, however has elected not to apply the public beneﬁ t
entity exemptions in NZ IFRS. ACC intends to prepare its ﬁ rst Financial Statements in accordance
with NZ IFRS for the year ending 30 June 2008. This is in-line with the New Zealand Crown
reporting requirements.
Transition management
A conversion project involving ﬁ nance staff, who engage with professional advisors, is led by the
General Manager, Finance has been established. The project team is:
• continually assessing the impact of changes in ﬁ nancial reporting standards on ACC’s
ﬁ nancial reporting and other related activities;
• designing models and implementing processes designed to deliver ﬁ nancial reporting
under NZ IFRS; and
• dealing with any related business impacts.
This project is largely completed and ACC expects to be in a position to comply with all NZ IFRS
requirements for the year ending 30 June 2008.
Impact on transition to NZ IFRS
The purpose of this disclosure is to highlight the expected impact to ACC as a result of transition
to NZ IFRS.
Most key accounting policy decisions have been agreed upon.
This note only provides a summary of the signiﬁ cant potential impacts resulting from transition
to NZ IFRS and should not be taken as an exhaustive list of all differences between existing New
Zealand Generally Accepted Accounting Practice (NZ GAAP) and NZ IFRS. The impact analyses
were carried out using NZ IFRS, interpretations and application guidance to NZ IFRS, effective
at 30 June 2006. It is possible therefore that actual impact of adopting NZ IFRS may vary from
the information presented, and the variation may be material. NZ IFRS 1: First-time Adoption of
New Zealand equivalents to International Financial Reporting Standards also allows a number
of exemptions to assist in the transition to reporting under NZ IFRS. The explanatory comments
below include details of the NZ IFRS 1 treatments adopted. Also included are the elective
exemptions to be applied under NZ IFRS 1.
118

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
The table below details the estimated impact on transition to NZ IFRS as at the date of transition.
Effect of
Restated totals
Total reported
Re-
transition
under NZ IFRS
$000
Notes
under NZ GAAP
classiﬁ cation
to NZ IFRS
at 1 July 2006
Claims liability
1
12,714,911
–
1,398,640
14,113,551
Unexpired risk liability
1
–
–
204,223
204,223
Unearned levy liability
1
382,706
–
1,060,276
1,442,982
Investments
2
9,033,170
–
(16,160)
9,017,010
Intangible assets
3
20
117,984
(20)
117,984
Property, plant and equipment
3
182,896
(117,984)
–
64,912
Payables and accrued
4
1,050,146
–
7,101
1,057,247
liabilities
Lease reinstatement provision
5
–
–
1,836
1,836
Deferred tax asset
6
423
–
104
527
Changes in accounting policies on transition to NZ IFRS
1. Claims liability – risk margin and liability adequacy test
The international accounting standard on the recognition and measurement of insurance
contracts is currently being developed by the International Accounting Standards Board as part
of Phase II of its insurance project. A ﬁ nal standard is only expected by 2010. Until such time NZ
IFRS 4: Insurance Contracts is applicable.
NZ IFRS 4 requires an additional risk margin to be factored into the measurement of the claims
liability, to allow for inherent uncertainty in the central estimate. Currently, ACC’s claims liability
is based on the concept of a “central estimate of liability” which implies no risk margin. The
inclusion of a risk margin will increase the claims liability.
At transition, ACC has incorporated a risk margin at 75% probability of sufﬁ ciency. This equates
to a risk margin of 11% of the claims liability and has therefore increased the claims liability by
$1,398.6 million at transition.
In addition to the application of a risk margin, a liability adequacy test must be performed
to support the adequacy of the unearned levy liability (that is, levy received in advance and
unearned levy liability) to meet estimated future claims. Under current accounting treatment, only
the earned portion of the levy income has been recognised in the Financial Statements. Under
NZ IFRS, the total (earned and unearned) will be recognised in the Financial Statements with the
unearned portion accounted for as unearned levy, which at transition date amounted to $1,060.3
million.
If the unearned levy liability is shown to be deﬁ cient, the deﬁ ciency must be recognised in the
Statement of Financial Performance. The results of the liability adequacy test shows that the
unearned levy liability is deﬁ cient, resulting in the recognition of an unexpired risk liability of
$204.2 million.
119

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
2. Valuation of investment assets
All investment assets, including derivative ﬁ nancial instruments entered into for risk
management purposes are classed as “held for trading” under the “fair value through proﬁ t
or loss” category in accordance with NZ IAS 39: Financial Instruments: Recognition and
Measurement. All of ACC’s investment assets back its insurance liabilities. Accounting treatment
for assets classed in the “fair value through proﬁ t or loss” class is largely consistent with current
practice in that the assets are held at fair value on the Statement of Financial Position with any
changes in fair value reﬂ ected in the Statement of Financial Performance in the period the change
occurs.
However, differences arise in determining fair value (for example, the use of bid prices rather the
last traded price) and the removal of a liquidity discount. On transition, the fair value of ACC’s
investment assets will decrease by $16.2 million due to the different basis of determining
fair value.
3. Reclassiﬁ cation of software assets to intangible assets
The only NZ IFRS transition adjustment identiﬁ ed for property, plant and equipment is the
reclassiﬁ cation of software assets to intangible assets. A review of the software assets has
determined that all software assets should be reclassiﬁ ed as intangible assets. The total amount
reclassiﬁ ed is $118.0 million.
Intellectual property rights of $20,000 in intangible assets has been written off to retained
earnings on transition.
4. Employee beneﬁ ts – long service leave, retirement leave and sick leave
Under current NZ GAAP, ACC recognises a liability for long service leave and retirement beneﬁ ts
only when certain criteria are met and leave entitlements have actually vested with the employee.
NZ IFRS requires all long term employee beneﬁ ts to be accrued as services are rendered by
employees, using an actuarial technique to determine the liability.
An accrual is also required to provide for anticipated sick leave where an entity allows for
an employee to accumulate sick leave. ACC and Dispute Resolution Services Ltd do not have
accumulating sick leave – a provision for sick leave is not required. However, Catalyst Risk
Management Ltd has an accumulating sick leave policy and therefore a provision has been
recognised.
The adjustment to these obligations amounted to $7.1 million.
5. Recognition of lease reinstatement provision
Under NZ IAS 37: Provisions, Contingent Liabilities and Contingent Assets a provision has been
made for the reinstatement of leasehold properties at the end of the lease term as per the
conditions of the lease agreement.
A new provision of $1.8 million is recognised accordingly.
120

Notes to the ﬁ nancial statements
For the year ended 30 June 2007
6. Deferred tax
The income statement approach has traditionally been used to calculate deferred tax. On
transition to NZ IFRS deferred tax is required to be calculated using the balance sheet approach.
This method recognises deferred tax balances where there is a difference between the carrying
value of an asset or liability, and its tax base.
ACC is exempt from income tax and therefore this will only impact its subsidiaries.
NZ IFRS 1 exemptions
NZ IFRS 1: First-time Adoption of New Zealand equivalents to International Financial Reporting
Standards allows a number of exemptions to retrospective application when adopting NZ IFRS for
the ﬁ rst time. ACC have elected to apply the following:
Business combinations
ACC has elected not to restate business combinations prior to the transition date (1 July 2006) on
an NZ IFRS basis. The carrying value of goodwill in Catalyst Risk Management Ltd will remain
at $nil.
Use of fair value or revaluation as deemed cost
ACC has elected to continue to use original cost for property, plant and equipment, rather than
treat current valuations as deemed cost.
121

Statement of responsibility
(Pursuant to section 155 of the Crown Entities Act 2004)
We acknowledge responsibility for the preparation of these Financial Statements and for the
judgements used therein.
We have been responsible for establishing and maintaining a system of internal control designed
to provide reasonable assurance as to the integrity and reliability of ACC’s ﬁ nancial and non-
ﬁ nancial reporting.
In our opinion, these Financial Statements fairly reﬂ ect the ﬁ nancial position and operations of
ACC for the year ended 30 June 2007.

Brenda Tahi
Peter Neilson
Board member
Board member
17 August 2007
17 August 2007
122

Report of the Ofﬁ ce of the Auditor-General
To the readers of Accident Compensation Corporation and Group’s ﬁ nancial statements and performance
information for the year ended 30 June 2007
The Auditor-General is the auditor of Accident Compensation Corporation (the ‘Corporation’) and group. The Auditor-General has appointed me, B R
Penrose, using the staff and resources of Ernst & Young, to carry out the audit on his behalf. The audit covers the ﬁ nancial statements and statement of
service performance included in the annual report of the Corporation and group for the year ended 30 June 2007.
Unqualiﬁ ed Opinion
In our opinion:
• The ﬁ nancial statements of the Corporation and group on pages 75 to 121:
– comply with generally accepted accounting practice in New Zealand; and
– fairly reﬂ ect:
– the Corporation and group’s ﬁ nancial position as at 30 June 2007; and
– the results of operations and cash ﬂ ows for the year ended on that date.
• The statement of service performance of the Corporation and group on pages 11 to 41:
– complies with generally accepted accounting practice in New Zealand; and
– fairly reﬂ ects for each class of outputs:
– standards of delivery performance achieved, as compared with the forecast standards outlined in the statement of forecast service
performance adopted at the start of the ﬁ nancial year; and
– actual revenue earned and output expenses incurred, as compared with the forecast revenues and output expenses outlined in the
statement of forecast service performance adopted at the start of the ﬁ nancial year.
The audit was completed on 17 August 2007, and is the date at which our opinion is expressed.
The basis of our opinion is explained below. In addition, we outline the responsibilities of the Board and the Auditor, and explain our independence.
Basis of Opinion
We carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the New Zealand Auditing Standards.
We planned and performed the audit to obtain all the information and explanations we considered necessary in order to obtain reasonable assurance
that the ﬁ nancial statements and statement of service performance did not have material misstatements, whether caused by fraud or error.
Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the ﬁ nancial
statements and the statement of service performance. If we had found material misstatements that were not corrected, we would have referred to them
in our opinion.
The audit involved performing procedures to test the information presented in the ﬁ nancial statements and statement of service performance. We
assessed the results of those procedures in forming our opinion.
Audit procedures generally include:
• determining whether signiﬁ cant ﬁ nancial and management controls are working and can be relied on to produce complete and accurate data;
• verifying samples of transactions and account balances;
• performing analyses to identify anomalies in the reported data;
• reviewing signiﬁ cant estimates and judgements made by the Board;
• conﬁ rming year-end balances;
• determining whether accounting policies are appropriate and consistently applied; and
• determining whether all ﬁ nancial statement and statement of service performance disclosures are adequate.
We did not examine every transaction, nor do we guarantee complete accuracy of the ﬁ nancial statements or statement of service performance.
We evaluated the overall adequacy of the presentation of information in the ﬁ nancial statements and statement of service performance. We obtained all
the information and explanations we required to support our opinion above.
Responsibilities of the Board and the Auditor
The Board is responsible for preparing ﬁ nancial statements and a statement of service performance in accordance with generally accepted accounting
practice in New Zealand. The ﬁ nancial statements must fairly reﬂ ect the ﬁ nancial position of the Corporation and group as at 30 June 2007 and the
results of operations and cash ﬂ ows for the year ended on that date. The statement of service performance must fairly reﬂ ect, for each class of outputs,
the Corporation and group’s standards of delivery performance achieved and revenue earned and expenses incurred, as compared with the forecast
standards, revenue and expenses adopted at the start of the ﬁ nancial year. The Board’s responsibilities arise from the Crown Entities Act 2004 and the
Injury Prevention, Rehabilitation and Compensation Act 2001.
We are responsible for expressing an independent opinion on the ﬁ nancial statements and statement of service performance and reporting that opinion
to you. This responsibility arises from section 15 of the Public Audit Act 2001 and the Crown Entities Act 2004.
Independence
When carrying out the audit we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of
the Institute of Chartered Accountants of New Zealand.
In addition to the audit, we have carried out assignments in the areas of compliance with tax legislation and assessing the impact of the introduction of
New Zealand equivalents to International Financial Reporting Standards on the ﬁ nancial statements of the Corporation, which are compatible with those
independence requirements. Other than the audit and these assignments, we have no relationship with or interests in the Corporation or any of its
subsidiaries.
B R Penrose
Ernst & Young
On behalf of the Auditor-General
Wellington, New Zealand
123

Remuneration of employees
The number of employees whose remuneration was within speciﬁ ed bands is as follows:
Consolidated
2007
2006
$100,000 – $110,000
43
36
$110,000 – $120,000
33
30
$120,000 – $130,000
25
23
$130,000 – $140,000
22
18
$140,000 – $150,000
12
11
$150,000 – $160,000
3
4
$160,000 – $170,000
6
3
$170,000 – $180,000
6
7
$180,000 – $190,000
4
3
$190,000 – $200,000
3
5
$200,000 – $210,000
4
1
$210,000 – $220,000
3
4
$220,000 – $230,000
2
1
$230,000 – $240,000
–
–
$240,000 – $250,000
1
1
$250,000 – $260,000
–
–
$260,000 – $270,000 –
–
$270,000 – $280,000
2
2
$280,000 – $290,000
–
–
$290,000 – $300,000
–
–
$300,000 – $310,000
–
–
$310,000 – $320,000
–
1
$330,000 – $340,000
2
–
$350,000 – $360,000*
–
2
$360,000 – $370,000
1
1
$370,000 – $380,000*
–
1
$380,000 – $390,000
–
1
$420,000 – $430,000
–
1
$430,000 – $440,000
1
–
$450,000 – $460,000
–
–
$460,000 – $470,000
–
1
$470,000 – $480,000*
–
1
$480,000 – $490,000
–
–
$490,000 – $500,000
1
–
$500,000 – $510,000*
–
1
174
159
Average remuneration of above employees
$141,434
$151,507
*
The band in 2006 includes redundancy payments made. Redundancy payments are excluded in the above for 2007.
25 staff received a redundancy payment or settlement payment in 2007 totalling $727,489.
124

Comparative statement of ﬁ nancial performance (Parent)
For the ﬁ ve years ended 30 June 2007
$000
2007
2006
2005
2004
2003
Combined
Total income
4,094,173
4,146,460
3,512,541
3,144,882
3,012,360
Total expenditure
2,806,929
2,495,152
2,268,492
2,098,904
1,977,120
Adjustment to claims liability
1,020,498
1,321,069
2,036,887
169,903
1,650,519
Surplus/(deﬁ cit)
266,746
330,239
(792,838)
876,075
(615,279)
Opening Account reserves
(3,833,585)
(4,165,732)
(3,374,567)
(4,251,546)
(3,636,300)
(deﬁ cit)
Amalgamation of the Non-
–
–
–
–
33
Compliers Fund
Increase/(decrease) in
3,715
1,908
1,673 904
–
revaluation reserve
Closing Account reserves
(3,563,124)
(3,833,585)
(4,165,732)
(3,374,567)
(4,251,546)
(deﬁ cit)
$000
2007
2006
2005
2004
2003
Residual Claims Account
Total income
372,466
389,685
290,606
284,703
298,912
Total expenditure
266,889
378,874
293,146
333,381
350,675
Adjustment to claims liability
(81,390)
303,867
172,705
(78,535)
112,432
Surplus/(deﬁ cit)
186,967
(293,056)
(175,245)
29,857
(164,195)
Opening Account reserve
(1,881,551)
(1,588,495)
(1,413,250)
(1,443,107)
(1,278,912)
(deﬁ cit)
Closing Account reserve
(1,694,584)
(1,881,551)
(1,588,495)
(1,413,250)
(1,443,107)
(deﬁ cit)
$000
2007
2006
2005
2004
2003
Motor Vehicle Account
Total income
812,414
854,190
755,601
662,950
494,636
Total expenditure
415,047
388,414
359,207
342,694
334,242
Adjustment to claims liability
410,471 316,119 649,239 100,641 500,274
Surplus/(deﬁ cit)
(13,104)
149,657
(252,845)
219,615
(339,880)
Opening Account reserve
(1,660,122)
(1,809,779)
(1,556,934)
(1,776,549)
(1,436,669)
(deﬁ cit)
Closing Account reserve
(1,673,226)
(1,660,122)
(1,809,779)
(1,556,934)
(1,776,549)
(deﬁ cit)
125

Comparative statement of ﬁ nancial performance (Parent)
For the ﬁ ve years ended 30 June 2007 (continued)
$000
2007
2006
2005
2004
2003
Non-Earners’ Account
Total income
814,684
763,014
618,734
620,636
637,456
Total expenditure
665,363
587,387
535,499
470,254
459,975
Adjustment to claims liability
324,687
207,265
402,650
(13,622)
344,692
Surplus/(deﬁ cit)
(175,366)
(31,638)
(319,415)
164,004
(167,211)
Opening Account reserve
(1,309,256)
(1,277,618)
(958,203)
(1,122,207)
(954,996)
(deﬁ cit)
Closing Account reserve
(1,484,622)
(1,309,256)
(1,277,618)
(958,203)
(1,122,207)
(deﬁ cit)
This Account was established, with effect from 1 April 1992, by the Accident Rehabilitation and Compensation Insurance
Act 1992.
$000
2007
2006
2005
2004
2003
Earners’ Account
Total income
1,114,700
1,099,891 1,002,976 830,580 870,579
Total expenditure
857,073
732,397
628,686
559,555
501,125
Adjustment to claims liability
231,838
267,411 391,627 2,068 316,824
Surplus/(deﬁ cit)
25,789
100,083
(17,337)
268,957
52,630
Opening Account reserve
532,469
432,386
449,723
180,766
128,136
Closing Account reserve
558,258
532,469
432,386
449,723
180,766
This Account was established, with effect from 1 April 1992, by the Accident Rehabilitation and Compensation Insurance
Act 1992.
$000
2007
2006
2005
2004
2003
Self-Employed Work Account
Total income
122,874
150,820
117,856
114,524
131,070
Total expenditure
81,712
64,460
86,911
82,218
75,183
Adjustment to claims liability
(2,235)
10,661
45,693
16,299
51,229
Surplus/(deﬁ cit)
43,397
75,699
(14,748)
16,007
4,658
Opening Account reserve
75,821 122
14,870
(1,137)
(5,795)
(deﬁ cit)
Transferred to Work Account
(119,218)
–
–
–
–
Closing Account reserve
–
75,821 122
14,870
(1,137)
(deﬁ cit)
This Account was established, with effect from 1 July 1999, by the Accident Insurance Act 1998.
The Account reserve in the Self-Employed Work Account at 31 March 2007 was transferred to the Work Account on
1 April 2007.
126

Comparative statement of ﬁ nancial performance (Parent)
For the ﬁ ve years ended 30 June 2007 (continued)
$000
2007
2006
2005
2004
2003
Employers’ Account
Total income
519,232 722,382 603,155 540,782 461,302
Total expenditure
333,806
287,088
316,410
271,600
224,575
Adjustment to claims liability
69,632
86,174
196,413
60,343
243,452
Surplus/(deﬁ cit)
115,794
349,120
90,332
208,839
(6,725)
Opening Account reserve
756,670
407,550
317,218
108,379
115,071

Transferred to Work Account
(872,464)
–
–
–
–
Amalgamation of the Non-
–
–
–
–
33
Compliers Fund
Closing Account reserve
–
756,670 407,550 317,218 108,379
This Account was established, with effect from 1 April 2000, by the Accident Insurance Amendment Act 2000.
The Account reserve in the Employers’ Account at 31 March 2007 was transferred to the Work Account on 1 April 2007.
$000
2007
2006
2005
2004
2003
Work Account
Total income
168,960
–
–
–
–
Total expenditure
117,853
–
–
–
–
Adjustment to claims liability
(44,975)
–
–
–
–
Surplus
96,082 –.
–.
–.
–.
Opening Account reserve
–
–
–
–
–
Transferred from Employers’
872,464
–
–
–
–
Account
Transferred from Self-Employed
119,218
–
–
–
–
Work Account

Closing Account reserve

1,087,764
–
–
–
–
This Account was established, with effect from 1 April 2007, and incorporates the former Self-Employed Work and
Employers’ Accounts, in accordance with the Act.
$000
2007
2006
2005
2004
2003
Treatment Injury Account
Total income
168,843
166,478
123,613
90,707
118,405
Total expenditure
69,186
56,532
48,633
39,202
31,345
Adjustment to claims liability
112,470
129,572
178,560
82,709
81,616
Surplus/(deﬁ cit)
(12,813)
(19,626)
(103,580)
(31,204)
5,444
Opening Account reserve
(352,145)
(332,519)
(228,939)
(197,735)
(203,179)
(deﬁ cit)
Closing Account reserve
(364,958)
(352,145)
(332,519)
(228,939)
(197,735)
(deﬁ cit)
This Medical Misadventure Account was established, with effect from 1 April 1992, by the Accident Rehabilitation and
Compensation Insurance Act 1992 and renamed the Treatment Injury Account on 1 April 2007, in accordance with the Act.
No expenditure was attributed to the Account until the year ended 30 June 1994.
127

Comparative statement of ﬁ nancial position (Parent)
As at 30 June
$000
2007
2006
2005
2004
2003
Account reserves
Residual Claims Account
(1,694,584)
(1,881,551)
(1,588,495)
(1,413,250)
(1,443,107)
Motor Vehicle Account
(1,673,226)
(1,660,122)
(1,809,779)
(1,556,934)
(1,776,549)
Non-Earners’ Account
(1,484,622)
(1,309,256)
(1,277,618)
(958,203)
(1,122,207)
Earners’ Account
558,258
532,469
432,386
449,723
180,766
Self-Employed Work Account
–
75,821
122
14,870
(1,137)
Employers’ Account
–
756,670
407,550
317,218
108,379
Work Account
1,087,764
–
–
–
–
Treatment Injury Account
(364,958)
(352,145)
(332,519)
(228,939)
(197,735)
Total Account reserves
(3,571,368)
(3,838,114)
(4,168,353)
(3,375,515)
(4,251,590)
Revaluation reserve
8,244
4,529 2,621
948 44
Total reserves (deﬁ cit)
(3,563,124)
(3,833,585)
(4,165,732)
(3,374,567)
(4,251,546)
Represented by:
Assets
Bank balances
28,413
16,960
13,169
16,051
24,444
Receivables
631,053 752,470 904,782  667,516  627,145
Accrued levy income
404,230
326,023
242,062
266,926
283,525
Investments
9,726,617 9,033,170 8,123,010 6,175,958 4,922,780
Investment in subsidiaries
3,450 3,450 3,450  1,450  1,100
Property, plant and equipment
194,530
181,498
148,868
100,797
87,327
Total assets
10,988,293 10,313,571  9,435,341 7,228,698 5,946,321
Less liabilities
Levy received in advance
279,302 382,706 366,767 346,176 313,478
Payables and accrued
536,706 1,049,539 1,849,949  909,897  729,582
liabilities
Claims liability
13,735,409
12,714,911
11,384,357
9,347,192
9,154,807
Total liabilities
14,551,417 14,147,156 13,601,073 10,603,265  10,197,867
Net liabilities
(3,563,124)
(3,833,585)
(4,165,732)
(3,374,567)
(4,251,546)
128

Contact Details
ACC head ofﬁ ce
(04) 918 7700  Fax: (04) 918 7701  [email address]
Injury prevention
0800 844 657
Employer levies
0800 222 776  [email address]  Freefax: 0800 222 003
Self-Employed levies and cover
0508 4cover (0508 426 837)  [email address]  Freefax: 0800 222 003
Agents’ and ﬁ nancial advisors’ queries
0800 222 991  Freefax: 0800 222 003
Debt management
0800 729 222  Fax: (04) 918 7467
Making a claim and requesting help
0800 101 996  [email address]
Accidental death claims
0800 222 075
Help with sexual abuse or assault claims
0800 735 566  Fax: (04) 918 7577
Treatment injury claims
0800 735 566  Fax: (04) 918 7672
Preventing fraud
0800 372 830
If you have concerns or complaints
0800 650 222  [email address]  Fax: 0800 750 222
www.acc.co.nz

ACC Corporate Ofﬁ ce
Shamrock House
81–83 Molesworth Street
P O Box 242
Wellington
Phone: (04) 918 7700
Fax: 918 7641
For more information contact:
[email address]
www.acc.co.nz
Printed on paper manufactured in an elemental chlorine-free (ecf) process using 50% virgin pulp from New Zealand and 50% recycled ﬁ bre.
ACC4257 • Printed September 2007