13
rmance
stat e m e n t o f s e rv i c e
o
pe r fo r m a n c e
vice perf
co n t e n t s
tement of ser
a
st
i n t r o d u c t i o n
63
62
k e y o b j e c t i v e 1 :
r e d u c i n g t h e i n c i d e n c e a n d s e v e r i t y o f
i n j u r y i n n e w z e a l a n d
64
k e y o b j e c t i v e 2 :
s at i s f i e d s ta k e h o l d e r s , e s p e c i a l ly
c l a i m a n t s
70
k e y o b j e c t i v e 3 :
m a x i m i s i n g t h e u t i l i t y o f p r ov i d e r s
73
k e y o b j e c t i v e 4 :
o p t i m i s i n g c a s e m a n a g e m e n t p r a c t i c e s
a n d p r o c e s s e s
74
k e y o b j e c t i v e 5 :
i n f o r m e d d e c i s i o n - m a k i n g a n d
i n t e r v e n t i o n d e v e lo p m e n t
78
k e y o b j e c t i v e 6 :
a l l s ta f f a r e p r ov i d e d w i t h t h e r i g h t
to o l s a n d s ys t e m s to d e l i v e r o u t c o m e s
79
k e y o b j e c t i v e 7 :
pa r t n e r s h i p s w i t h mäori
80
k e y o b j e c t i v e 8 :
i m p r ov e d r e l at i o n s h i p s w i t h
pa c i f i c p e o p l e s
81
k e y o b j e c t i v e 9 :
f i n a n c i a l m a n a g e m e n t
82
i n t ro d u c t i o n
st
a
tement of ser
This report covers ACC’s performance for the year against
ACC’s mission sets out ACC’s commitment to deliver an
the objectives set out in the 2003-2004 Statement of
effective and effi cient scheme to levy payers and claimants:
Intent. ACC’s performance framework is summarised below.
To foster a safe New Zealand becoming injury
ACC is a Crown entity existing under the provisions of the
free through the implementation of the New
vice perf
Injury Prevention, Rehabilitation, and Compensation Act
Zealand Injury Prevention Strategy. To ensure
2001 (‘the Act’) to provide comprehensive, 24-hour, no-fault
that when injury does occur, people are provided
personal injury cover for all New Zealand residents. Cover is
o
with the correct entitlements and rehabilitated
rmance
managed under seven Accounts:
with respect and dignity.
• the Employers’ Account for personal injuries in the
To achieve this mission via the operation of a successful
workplace affecting employees
scheme, ACC’s 2003-2004 strategic directions for the
63
• the Residual Claims Account for personal injuries in
medium term to 2005 (‘The 5 Drivers’) were:
the workplace before 1 July 1999, or involving earners
• Injury prevention – Reduce the rate of injuries and
outside the workplace before 1 July 1992
claims by at least 10% over the next fi ve years.
• the Self-Employed Work Account for personal injuries in
• Claimant
satisfaction
–
Increase claimant and
the workplace affecting the self-employed
stakeholder satisfaction to 80-85% by 2005.
• the Motor Vehicle Account for personal injuries
involving motor vehicles
• Staff
satisfaction
–
Increase staff satisfaction to 80-85%
by 2005.
• the Earners’ Account for personal injuries outside the
workplace for those in paid work
• Rehabilitation
–
Improve effective rehabilitation
outcomes (measured by improvements in rehabilitation
• the Non-Earners’ Account for personal injuries outside
the workplace for those not in paid work
rates for three, six and 12 months’ duration).
• the Medical Misadventure Account for injuries from rare
• Fair
levies
– Maintain fair levy rates.
medical mishaps or medical error.
To achieve its vision by 2005, ACC focused on the
The Act specifi es ACC’s role and functions to include:
following eight key objectives, with associated goals and
performance measures, in 2003-2004:
• promoting measures to reduce the incidence and
severity of personal injury
1. reducing the incidence and severity of injury in
New Zealand
• determining
cover
2. satisfi ed stakeholders, especially claimants
• providing statutory and other entitlements
• collecting
levies
3. maximising the utility of providers
• managing
the
Accounts
4. optimising case management practices and processes
• administering a disputes resolution process.
5. informed decision-making and intervention
development
ACC’s basic strapline of Prevention – Care – Recovery is
6. all staff are provided with the right tools and systems to
fi rmly grounded in the principles of the Royal Commission
deliver outcomes
of Inquiry into Compensation for Personal Injuries in New
Zealand, 1967 (the ‘Woodhouse Report’). These principles
7. partnerships with Mäori
have stood the test of time and still apply today.
8. improved relationships with Pacifi c peoples.
ACC’s vision for where it wants to be by 2005 provides a
In addition, ACC set goals for fi nancial management, which
basis for its strategic direction:
are grouped as key objective 9.
ACC will contribute to a nation where there are
fewer injuries and those injured return quickly to
wellbeing.
k ey o b j ec t i ve 1:
r e d u c i n g t h e i n c i d e n c e a n d s eve r i t y o f i n j u ry i n
n ew ze a l a n d
rmance
ACC aims to be New Zealand’s premier safety organisation
• its value in reinforcing a safety culture and safety
o
and a leader in community-based injury prevention
environment, both locally and nationally.
programmes. To achieve this, ACC will increase resources
vice perf
and capability in cost-effective injury prevention activity
Goal 1.2: Reducing work injuries
focusing on local and targeted programmes. ACC will
ACC continued to increase its injury prevention initiatives in
use the injury prevention framework outlined in the New
the workplace this year.
Zealand Injury Prevention Strategy released in June 2003.
The Safer Industries programme facilitates injury
tement of ser
a
In 2003-2004, ACC aimed to reverse the recent growth in
prevention initiatives in high-risk industries through
st
claims and progress towards its long-term goal of a 10%
collaborative partnerships between industry groups,
64
reduction in claims by 2008 through continuing to monitor
employers, union and other worker representatives, ACC
injuries and progress with programmes to prevent injuries
and relevant government agencies. ACC has intervention
in sport and in the home, the workplace and on the road.
plans in place for all nine Safer Industries and during
2003-2004 co-ordinated and assisted the delivery of a wide
The existing effective injury prevention programmes
range of programmes and training targeted at achieving
were maintained (eg ACC SportSmart and ACC Stop
signifi cant injury reduction benefi ts. Highlights include:
Bus), new programmes developed (eg Workplace
Safety Evaluations, Driver Fatigue) and innovative
• Over 9,200 have attended FarmSafe workshops and it is
opportunities identifi ed (eg a brief intervention model
anticipated that 3,000 farmers will attend the recently
to prevent suicide, family violence prevention). Excellent
developed FarmSafe 2 course.
progress was also made in establishing key community
• 4,000 people have completed the passport training for
relationships with local government, District health
supermarkets since June 2003.
boards and employers, as refl ected in high satisfaction
• Patient handling guidelines were distributed to over
ratings for client groups such as large employers and
2,000 health sector employers in late October 2003.
ACC Partnership Programme employers.
ACC has supported the development and delivery of
Goal 1.1: Community initiatives
approved training courses in conjunction with the
New Zealand Council of Trade Unions and Business
ACC established 23 ThinkSafe communities throughout the
New Zealand through employers and manufacturers
country in 2001-2002. Each community focuses on local
associations. More than 6,000 health and safety
injury prevention priorities aimed at reducing injury issues
representatives, supervisors and others attended
according to local needs.
programmes and courses during the year.
Areas of focus in 2003-2004 were preventing falls in
ACC’s Partnership Programme, under which employers
older adults, falls in children and child playground falls,
manage their employees’ work-related injury claims in
road-related injuries, sports injuries and the safer industry
return for signifi cant levy discounts, now includes 182
programmes where they affect local employers.
employer groups, representing 26% of the workforce. Injury
Key outputs in the ThinkSafe communities this year are
rates have decreased in almost 90% of these groups.
detailed on pages 28-39.
Over 350 employers joined the Workplace Safety
An evaluation of the ThinkSafe community initiative in
Management Practices programme this year, taking the
September 2003 by the University of Auckland Injury
total to 1,861.
Prevention Research Centre praised its approach including:
ACC identifi ed 200 new employers with high injury rates for
• the levels of community and employer participation
the Employer Early Intervention programme, which provides
• the potential for future sustainable partnerships
resources to improve the health and safety practices of
high-risk workplaces. Work continued with 92 companies
Goal 1.5: Preventing and reducing injuries in
who joined in 2002-2003 – they averaged a 29% reduction
and around the home
in ACC claims as at 30 September 2003.
The prevention of injuries occurring in and around the
st
a
tement of ser
ACC’s Workplace Safety Evaluation programme began in
home is focused on three age groups:
late 2003 and provides intensive workplace safety advice
• ACC has signifi cantly increased its ThinkSafe
and assistance to employers with poor accident histories,
community programmes in fall prevention for older
to target the underlying causes of serious and/or prevalent
adults.
vice perf
injuries in their workplaces. Failure to take appropriate
• Reducing falls, particularly in playgrounds, and
action can result in a 50% increase in the employer’s
reducing injuries to children who are not restrained
standard ACC Workplace Cover levy as provided for by
o
in cars continues to be the main focus of ACC’s child
rmance
the Act. Over 150 employers were helped through this
safety work. This activity is delivered via the
programme and are on track to achieve 25% reductions in
ThinkSafe communities.
workplace injury. No penalties have yet been imposed.
• ACC continues to expand the Slips, Trips and Falls
65
Goal 1.3: Preventing and reducing sporting
programme targeting 25 to 55-year-olds. The mass
injuries
media campaign was extended, including a new
advertisement. Surveys showed a high awareness
SportSmart is ACC’s 10-point action plan for preventing
of the campaign and its messages among the target
sports injuries. ACC continues to focus its activity on the
audience, but further work is required to increase
sports that have the most injuries – rugby, netball, soccer,
awareness of the severity of potential injuries.
touch, rugby league, snow sports and water sports.
Further details are provided on pages 35-36.
During 2003-2004 ACC achieved that focus through
promoting and developing:
Goal 1.6: Addressing intentional injury
• Sideline Management of Strains and Sprains courses
ACC has progressed the establishment of its role in
• RugbySmart 2004 workshops
preventing intentional injury (violence and suicide),
• the Sideline Concussion Check card
including:
• SportSmart courses for Future Ferns coaches
• the development of a framework for injury prevention
work in the area of alcohol and other drugs
• other SportSmart training for coaches
• undertaking work with the Alcohol Advisory Council
• the Snow Responsibility Code and wristguard wearing
of New Zealand (ALAC) and the New Zealand Police to
for snowboarders.
qualify and quantify the relationships between alcohol
Further details are provided on pages 33-34.
and injury and on the types of enforcement that reduce
alcohol-related injury in public settings.
Goal 1.4: Preventing and reducing road traffi c
injuries
Preliminary work has begun on identifying ACC claims
ACC’s road safety portfolio focused on both key injury risk
arising out of a drug overdose or suicide event. In
factors (speed, alcohol, safety belt wearing and fatigue)
partnership with the University of Auckland Injury
and on key risk groups in the population (motorcyclists and
Prevention Research Centre and the Auckland District
young drivers).
Health Board, ACC is developing a programme to provide a
brief intervention to people who have attempted suicide.
Details of particular initiatives during 2003-2004 are
provided on pages 31-33.
Goal 1.7: Implementing the New Zealand Injury
Prevention Strategy (NZIPS)
An evaluation of ACC’s Stop Bus programme showed very
positive results including a decrease in alcohol-related
Launched in June 2003, the NZIPS provides a strategic
crashes within the intervention districts compared with the
framework for the injury prevention activities of
other districts.
government and non-government organisations and
communities to improve injury prevention performance.
ACC is responsible for leading and co-ordinating
New claims numbers
implementation of the Strategy and established a
New claims are monitored in three main categories: total
Secretariat to ensure an effective shift from strategy
claims registered, new ‘weekly compensation’ claims,
development to implementation reality.
and new ‘other entitlement’ claims (claims receiving
rmance
Key actions during the year:
entitlements other than medical fees payment but not
o
weekly compensation).
• After extensive consultation, the 2004-2005
Implementation Plan was launched in October 2003.
ACC monitors claim rates relative to appropriate exposure
vice perf
• A redeveloped website to support implementation
bases (population and motor vehicle numbers). Target
activities went live in March 2004.
claim rates for 2003-2004 refl ected historic trends, injury
• The
fi rst issue of a quarterly newsletter was
prevention programmes and ACC’s activities in respect of
tement of ser
distributed in May 2004 to over 650 injury prevention
scheme access and awareness.
a
st
practitioners in government, non-government and
community organisations.
66
• The Secretariat convened meetings and supported
the work of the Strategy’s three advisory bodies
– the Stakeholder Reference Group, the Government
Interagency Steering Group and the Expert
Advisory Panel.
• The Secretariat worked with lead government
agencies such as the Department of Labour (OSH)
and the Ministries of Health and Youth Development
in developing new strategies for workplace injuries
and suicide.
• ACC is development leader of two of the six national
priority strategies – drowning/near-drowning and falls.
Preparatory work including literature reviews and
identifying interested parties began in 2004. A baseline
stocktake of drowning and near-drowning prevention
activity has begun.
• An evaluation framework for the Strategy was
developed in accordance with the 2004-2005
Implementation Plan.
• Surveys of safety-related law and injury prevention
research providers were completed in May and
June 2004.
• A stocktake of 143 government and 55 non-government
organisations involved in injury prevention to establish
baselines of injury prevention activity was commenced
in May 2004.
• The Secretariat has established working relationships
with non-government and community organisations.
It also attended community-based injury prevention
forums to explain the Strategy’s role and how
implementation will assist community-based initiatives.
New claims registered
The following tables show the number of new claims
Higher claim numbers in the Earners’ Account also refl ect a
registered in 2003-2004, and claim rates, in total and by
greater proportion of the population being in employment.
st
a
Account. The charts show a 12-month moving average of
There has been a corresponding opposite impact in the
tement of ser
the number of new claims registered by month since 1999,
Self-Employed Work and Non-Earners’ Accounts.
in total and by Account.
Increased claim numbers in the Motor Vehicle Account
Overall new claim rates increased slightly. Rates increased
also refl ect increases in vehicle numbers and vehicle
vice perf
signifi cantly in the Motor Vehicle Account and to a lesser
kilometres travelled.
extent, the Earners’ Account. Rates decreased in the
Employers’ and Self-Employed Work Accounts.
o
rmance
2003-2004
2002-2003
n ew c l a i m s r e g i st e r e d
ac tua l
ac tua l
ACC Total
1,504,732
1,474,945
67
Employers’ Account
168,266
165,390
Self-Employed Work Account
45,129
48,300
Residual Claims Account
1,671
599
Motor Vehicle Account
39,583
36,708
Non-Earners’ Account
718,758
725,503
Earners’ Account
530,075
497,763
Medical Misadventure Account
1,250
682
2003-2004
2003-2004
2002-2003
n ew c l a i m s r e g i st e r e d pe r 100 popul ation
ac tua l
fo rec a st
ac tua l
ACC Total
36.98
37.93
36.79
Employers’ Account
10.53
10.72
10.80
Self-Employed Work Account
12.37
17.25
13.61
Non-Earners’ Account
34.13
35.35
34.16
Earners’ Account
27.00
27.01
26.40
Motor Vehicle Account (per million km)
108.09
102.06
101.55
new claims registered per month
new claims registered per month
acc total
12-month moving average by account
175,000
70,000
150,000
60,000
125,000
50,000
100,000
40,000
75,000
30,000
50,000
20,000
25,000
10,000
0
0
9
9
0
0
1
1
2
2
3
3
4
9
9
0
0
1
1
2
2
3
3
4
Jun 9
Dec 9
Jun 0
Dec 0
Jun o
Dec 0
Jun 0
Dec 0
Jun 0
Dec 0
Jun 0
Jun 9
Dec 9
Jun 0
Dec 0
Jun o
Dec 0
Jun 0
Dec 0
Jun 0
Dec 0
Jun 0
Employers’ Account
Earners’ Account
Motor Vehicle Account
New Claims
Moving Average
Self-Employed Work Account
Non-Earners’ Account
New weekly compensation claims
The following tables show new weekly compensation
Accounts are consistent with the increase in new claims
claims in 2003-2004, and claim rates, in total and by
registered. The increased numbers in the Self-Employed
Account. The charts show a 12-month moving average of
Work Account refl ect an increasing ‘conversion’ rate relative
rmance
the number of new weekly compensation claims by month
to the number of new claims registered. The increased
o
since 1999, in total and by Account.
conversion rate in the Employers’ and Self-Employed Work
Accounts is consistent with the newness of the Accounts
Total new weekly compensation claims increased by 5.5%
vice perf
and the time-lags with some claims between registration
with the rate per 100 population increasing by 4%.
The
and initial access to weekly compensation.
increased numbers in the Motor Vehicle and Earners’
2003-2004
2002-2003
tement of ser
a
n ew we e k ly com pe n s at i o n c l a i m s
ac tua l
ac tua l
st
ACC Total
60,828
57,680
68
Employers’ Account
18,688
17,943
Self-Employed Work Account
3,943
3,841
Residual Claims Account
541
586
Motor Vehicle Account
3,548
3,235
Non-Earners’ Account
481
446
Earners’ Account
33,456
31,452
Medical Misadventure Account
171
177
2003-2004
2003-2004
2002-2003
n ew we e k ly com pe n s at i o n c l a i m s pe r 100 popul ation
ac tua l
fo rec a st
ac tua l
ACC Total
1.49
1.49
1.44
Employers’ Account
1.17
1.15
1.17
Self-Employed Work Account
1.08
1.35
1.08
Earners’ Account
1.70
1.72
1.67
Motor Vehicle Account (per million km)
9.69
8.66
8.96
new weekly compensation claims per month
new weekly compensation claims per month
acc total
12-month moving average by account
7,000
3,500
6,000
3,000
5,000
2,500
4,000
2,000
3,000
1,500
2,000
1,000
1,000
500
0
0
9
9
0
0
1
1
2
2
3
3
4
Jun 99
Dec 99
Jun 00
Dec 00
Jun o1
Dec 01
Jun 02
Dec 02
Jun 03
Dec 03
Jun 04
Jun 9
Dec 9
Jun 0
Dec 0
Jun o
Dec 0
Jun 0
Dec 0
Jun 0
Dec 0
Jun 0
Employers’ Account
Self-Employed Work Account
New Claims
Moving Average
Motor Vehicle Account
Earners’ Account
New other entitlement claims
The following tables show the number of new other
The increased numbers in the Motor Vehicle Account are
st
entitlement claims in 2003-2004, and claim rates, in total
consistent with the increase in new claims registered.
a
tement of ser
and by Account. The charts show a 12-month moving
The increased numbers in the Employers’ Account refl ect
average of the number of new other entitlement claims by
an increasing ‘conversion’ rate as with new weekly
month since 1999, in total and by Account.
compensation claims above.
Total new other entitlement claims increased by 1% with
vice perf
the rate per 100 population decreasing slightly.
o
rmance
2003-2004
2002-2003
n ew ot h e r e n t i t l e m e n t c l a i m s
ac tua l
ac tua l
ACC Total
39,571
39,195
69
Employers’ Account
4,245
3,801
Self-Employed Work Account
1,368
1,350
Residual Claims Account
1,532
1,595
Motor Vehicle Account
1,420
1,249
Non-Earners’ Account
21,237
21,531
Earners’ Account
9,569
9,473
Medical Misadventure Account
200
196
2003-2004
2003-2004
2002-2003
n ew ot h e r e n t i t l e m e n t c l a i m s pe r 100 popul ation
ac tua l
fo rec a st
ac tua l
ACC Total
0.97
0.99
0.98
Employers’ Account
0.27
0.25
0.27
Self-Employed Work Account
0.37
0.47
0.38
Non-Earners’ Account
1.01
1.05
1.00
Earners’ Account
0.49
0.50
0.49
Motor Vehicle Account (per million km)
3.88
3.27
3.44
new other entitlement claims per month
new other entitlement claims per month
acc total
12-month moving average by account
7,000
2,100
6,000
1,800
5,000
1,500
4,000
1,200
3,000
900
2,000
600
1,000
300
0
0
9
9
0
0
1
1
2
2
3
3
4
Jun 99
Dec 99
Jun 00
Dec 00
Jun o1
Dec 01
Jun 02
Dec 02
Jun 03
Dec 03
Jun 04
Jun 9
Dec 9
Jun 0
Dec 0
Jun o
Dec 0
Jun 0
Dec 0
Jun 0
Dec 0
Jun 0
Employers’ Account
Earners’ Account
Motor Vehicle Account
New Claims
Moving Average
Self-Employed Work Account
Non-Earners’ Account
k ey o b j ec t i ve 2:
s at i s f i e d sta k e h o l d e r s , e s pec i a l ly c l a i m a n t s
ACC aims for all New Zealanders to recognise the social
Goal 2.1: Timely and accurate payment of
rmance
and economic value of the ACC Scheme, the benefi ts
o
entitlements
of a 24-hour, no-fault system and the development of a
ACC is committed to continually improving the timeliness
stakeholder-centred culture in ACC.
and accuracy of entitlement payments to claimants.
vice perf
In April 2004, the Controller and Auditor-General released
Payment timeliness
his report on ACC’s case management of rehabilitation and
Payment timeliness is measured using the time taken to
compensation, assessing that ACC’s case management
make the initial payment of weekly compensation. Payment
practices are thorough and work well, and that ACC staff
tement of ser
a
timeliness during 2003-2004 to both employee and
st
are professional in their approach.
self-employed claimants is superior to the target level and
70
continues the improvements from previous years.
sta n da r d t i m e
2003-2004
2003-2004
2002-2003
paym e n t t i m e l i n e s s ( % w i t h i n sta n da r d t i m e )
( c a l e n da r days )
r e s u lt
ta rg et
r e s u lt
Employees
7 days
67%
60%
56%
Self-employed
10 days
68%
60%
61%
payment timeliness for claims
payment timeliness for claims
from employees (median days)
from self-employed (median days)
25
25
20
20
15
15
10
10
5
5
0
0
Jun 99
Dec 99
Jun 00
Dec 00
Jun o1
Dec 01
Jun 02
Dec 02
Jun 03
Dec 03
Jun 04
Jun 99
Dec 99
Jun 00
Dec 00
Jun o1
Dec 01
Jun 02
Dec 02
Jun 03
Dec 03
Jun 04
Median Days
Moving Average
Standard
Median Days
Moving Average
Standard
Payment accuracy
Goal 2.2: Service consistent with the Code of
ACC Claimants’ Rights
The accuracy of payments to claimants in 2003-2004 is
determined from monthly samples of claims on the same
st
ACC is committed to meeting the obligations of the Code of
a
tement of ser
basis as 2002-2003. There has been a slight decrease in
ACC Claimants’ Rights introduced on 1 February 2003.
accuracy due mainly to insuffi cient documentation on claim
From then to 30 June 2004, 2,186 complaints alleging
fi les and unavailability of fi les for review.
breaches of the Code were received, almost half relating to
The Payment Accuracy rate measures the percentage of the
Right 5 (the right to effective communication) and Right 6
vice perf
total amounts paid on the claims reviewed that were correct.
(the right to be fully informed). On average, complainants
The result for 2003-2004 of 98.5% represents a slight
register 2.1 issues per complaint.
o
reduction from the 2002-2003 result of 98.8% – the change
rmance
At 30 June 2004, decisions had been issued for 2,039
being within the margin of error.
alleged breaches. Of these alleged breaches, 1,380 (68%)
The Claims Without Error rate measures the percentage of
were found not breached and 659 (32%) were found
claims reviewed that had no error and has decreased from
breached. Of the rights breached, 35% relate to Right 5 and
71
91.0% in 2002-2003 to 86.5% in 2003-2004.
28% to Right 6.
Of the remedies given, 83% were written apologies, 5%
were written explanations and 3% were arranged meetings.
payment accuracy results
Since the implementation of the Code, ACC has instigated
100%
a number of initiatives to monitor and analyse Code
90%
80%
complaints, including employing a dedicated data analyst,
70%
a Quarterly Feedback Report to all staff detailing complaint
60%
information, and a complaint database to analyse data
50%
collected since 1994.
40%
30%
Other initiatives include streamlining 0800 complaint line
20%
call-handling, focusing on complaint resolution, and regular
10%
0%
branch visits by complaint investigators to discuss trends
and issues.
1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004
Amount paid
Payment Accuracy
Claims without
in error/total
ACC completed an evaluation covering the fi rst 12 months’
Rate
Error Rate
payments sampled
operation of the Code in May 2004. The review showed
that introducing the Code has been a positive step and well
received by claimants and ACC staff.
n u m b e r o f
n u m b e r o f
com pl a i n t s
n u m b e r
b r e ac h e s
% fo u n d
co d e r i g h t s
r ec e i ve d
c lo s e d
fo u n d
b r e ac h e d
right 1 – the right to be treated with dignity and respect
376
354
101
29%
right 2 – the right to be treated fairly and to have views
422
388
101
26%
considered
right 3 – the right to have culture, values, and beliefs
46
43
2
5%
respected
right 4 – the right to a support person or persons
49
44
2
5%
right 5 – the right to effective communication
583
549
229
42%
right 6 – the right to be fully informed
503
473
185
39%
right 7 – the right to have privacy respected
127
118
29
25%
right 8 – the right to complain
80
70
10
14%
total
2,186
2,039
659
32%
Goal 2.3: Claimant satisfaction
acc claimant satisfaction
ACC surveys the level of claimant satisfaction monthly.
100%
Overall claimant satisfaction (in respect of claims
95%
managed by ACC’s branch network) continues the
rmance
90%
o
improvement seen since the survey was extended to
85%
include long-term claimants in September 2001. The
80%
result for 2003-2004 of 84% exceeds the target of 80%
vice perf
75%
and the 2002-2003 level of 81%.
70%
65%
60%
tement of ser
a
1998-1999
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
st
Overall
Duration
Duration
Satisfaction
under 52 wks
over 52 wks
72
c l a i m a n t s at i s fac t i o n ( i n r e s pec t o f c l a i m s
2003-2004
2002-2003
m a rg i n o f
m a n ag e d by acc ’s b r a n c h n e t wo r k )
r e s u lt ta rg e t
r e s u lt
s a m pl e s i ze
e r ro r ( + / - )
Overall claimant satisfaction
84%
80%
81%
6,727
1.2%
Claimant satisfaction (duration under 52 weeks)
88%
N/A
85%
5,073
1.4%
Claimant satisfaction (duration over 52 weeks)
73%
N/A
69%
1,654
2.4%
Claimant reviews and appeals
ACC targets 70% of reviews and appeals to be favourable to ACC, or for the application to be withdrawn. That target
was exceeded.
t h e o u tcom e s o f c l a i m a n t r ev i ew s
d i st r i c t co u rt c l a i m a n t a p pe a l s
fo r 2003-2004
r e s u lt
fo r 2003-2004
r e s u lt
Review dismissed
2,703
Appeal dismissed
258
Decision modifi ed
105
Appeal allowed
106
Decision quashed
1,057
Interim order made
8
Review withdrawn
1,163
Appeal withdrawn
390
Total
5,028
Total
762
Percentage favourable to ACC
Percentage favourable to ACC
77%
85%
or withdrawn – 2003-2004
or withdrawn – 2003-2004
Target
70%
Target
70%
Percentage favourable to ACC
Percentage favourable to ACC
79%
79%
or withdrawn – 2002-2003
or withdrawn – 2002-2003
Goal 2.4: Levy payer satisfaction
Levy rates
st
The 2004-2005 levies for employers, self-employed, earners and motor vehicles were announced in December 2003. The
a
tement of ser
average levies are set out below.
acco u n t
2004-2005
2003-2004
Employers’
91 cents per $100 of liable earnings
90 cents per $100 of liable earnings
vice perf
Self-Employed Work
$1.73 per $100 of liable earnings
$1.79 per $100 of liable earnings
Earners’
$1.20 per $100 of liable earnings (including
$1.20 per $100 of liable earnings (including
o
GST)
GST)
rmance
Motor Vehicle
$126.01 per annual petrol-driven motor car
$141.10 per annual petrol-driven motor car
licence; plus
licence; plus
5.08 cents per litre petrol excise
5.08 cents per litre petrol excise
73
Residual Claims
30 cents per $100 of liable earnings
31 cents per $100 of liable earnings
Levies remained relatively stable, with a slight reduction in
Levy payer satisfaction
the Self-Employed Work Account and a 7% decrease in the
ACC measures the level of employer levy payer satisfaction
Motor Vehicle Account.
by survey.
The decrease in motor vehicle levies refl ects lower than
Overall satisfaction with the level of service the largest
expected injury claim costs and a larger number of
2,500 employer levy payers received from ACC at 84%
registered vehicles.
exceeded ACC’s target of 80% and is unchanged from the
2002-2003 result.
2003-2004
2002-2003
m a rg i n o f
l ev y paye r s at i s fac t i o n
result ta rget
r e s u lt s a m pl e
s i ze
e r ro r ( + / - )
Top 2,500
84%
80%
84%
808
3.4%
Top 500
81%
N/A
81%
368
5.1%
Next 2,000
87%
N/A
85%
440
4.7%
Satisfaction levels for small and medium-sized employers
to medium employers and self-employed levy payers.
(69%) and self-employed (63%) are lower than for the
ThinkSmall is a group of projects aimed at increasing the
larger employers. ACC launched ThinkSmall in June 2004
satisfaction of that group of customers.
to those staff directly involved in dealing with small
k ey o b j ec t i ve 3: maximising the utility of providers
ACC actively manages its relationship with providers,
ACC’s Provider Relationship Team was set up in late 2002
aiming to achieve the best possible rehabilitation outcomes
to promote better interaction between ACC and health
for claimants.
providers, and has proved a great success. This year
the team averaged 450 visits per month to providers
Goal 3.1: Positive relationships with treatment
throughout New Zealand. Particular support was provided
providers
for the changes to the Cost of Treatment Regulations,
ACC continued to focus on establishing and maintaining a
and the rollout of the Endorsed Provider Network and
positive relationship with providers.
Rural Contracts.
ACC also organised:
ACC completed an engagement strategy in February 2004
• regular meetings with provider organisations to
covering the purchase of health services. The strategy
consult on directions, communicate developments
incorporates quality frameworks for providers.
and share concerns
Goal 3.3: Effective use of technology
rmance
• provider evenings that continued to prove popular
o
– this year dealing with Best Practice Evidence-based
Technology is being used to speed up transactions between
Guidelines and the
New Zealand Acute Low Back
ACC and providers, reduce paper-based transactions and
vice perf
Pain Guide
promote best practice. The percentage of claims lodged
electronically increased from 38% for 2002-2003 to 47%
• training sessions for practice staff nationwide on
for 2003-2004 (54% during June 2004). Similarly, electronic
the changes to the Cost of Treatment Regulations,
lodgement of treatment fees schedules increased from 47%
the Endorsed Provider Network contract and the
tement of ser
for 2002-2003 to 50% for 2003-2004.
a
Rural Contract.
st
The Providers section of the ACC website provides a
The 2003 Provider Survey showed an increase in the
74
comprehensive resource for providers, including advice on
general practitioner satisfaction rate from 43% in 2002 to
current scheme issues, support for the provider services
59% in 2003.
process such as for claims and fees for services, and the
Goal 3.2: Develop quality frameworks and
extensive range of ACC’s best practice material.
promote best practice
ACC is signifi cantly involved in projects to develop
ACC works to ensure that providers understand the
technology for secure email communication between
important role that they play in the provision of quality
ACC and providers, employers and claimants, and
outcomes to ACC claimants.
between providers.
ACC aimed to develop best practice guidelines for at least
three major injury groups in 2003-2004, and to foster at
least six projects with provider groups by December 2003
that encourage best practice.
Those targets were achieved and details are provided on
page 45.
Best practice is also promoted through the issuing of
treatment vignettes, the continuing development of
treatment profi les and the production of videos providing
practical training on the treatment of common injuries.
k ey o b j ec t i ve 4: optimising case management practices
a n d p ro c e s s e s
Over the past four years, ACC has improved early effective
satisfaction, signifi cantly reduced average claim durations,
rehabilitation processes to ensure claimants are returned
and reduced scheme costs.
to independence within the recommended duration for
ACC’s goal is to increase the proportion of claimants
their injury, based on international best practice, measured
who return to work readiness or independence within an
through Medical Disability Advisor (MDA) guidelines.
optimum period of time, determined by the ACC legislation,
In most areas this has halved the time claimants spend
and the nature and extent of their injury.
waiting for services and ensured more effective and
permanent rehabilitation. This work has increased claimant
Goal 4.1: Early and appropriate intervention
• a successful drug and alcohol programme pilot
(subsequently extended), providing case managers
The faster receipt of new claims through increased
with actions to take with claimants whose rehabilitation
electronic lodgement and ACC-funded ‘FastPost’, and same-
st
is affected by suspected drug and/or alcohol problems
a
day registration of most claims on receipt, enables ACC to
tement of ser
provide services to claimants earlier. The median time-span
• the implementation of an Endorsed Psychiatric Provider
between an injured person visiting their provider and ACC’s
Programme, which gives ACC the ability to effectively
receipt of the claim reduced from four days in 2000-2001,
manage psychiatric treatment of claimants against
vice perf
to three days in 2001-2002, and to two days in 2003-2004
agreed performance measures
in respect of entitlement claims.
• elective surgery – ACC spent $85 million during 2003-
2004 purchasing surgery direct from public and private
o
ACC’s Contact Centres make early contact with claimants
rmance
providers, aiming to speed up the rehabilitation process
whose claim details or inbound contact indicate that
for claimants
further assistance beyond initial treatment is required.
• approval of over 200 lifetime rehabilitation plans
This contact clarifi es the claimants’ needs and identifi es
addressing the rehabilitation and support needs of the
75
appropriate ACC responses, eg Packages of Care to meet
seriously injured
home-based rehabilitation needs, and referral to branch-
based case managers.
• the 14-Day Medical Certifi cate pilot, which asks medical
providers to reassess claimants at 14 days if they are
The Contact Centres handle low- to-medium-duration claims
still off work. The reassessment validates the initial
that do not involve extensive or complex interventions. The
diagnosis, checks the reasonableness of the indicated
Centres aim to maximise the number of claims they handle
duration of the incapacity and identifi es potential
in order to reduce the workload in branches – which focus on
barriers to rehabilitation and has provided ACC with
more complex, longer-duration claims.
better knowledge of a claimant’s condition
• the introduction of Contact Centre Scripts to enable
Goal 4.2: Standard operating procedures
staff to explore more fully a claimant’s diagnosis
ACC reviewed the different case management processes
and their support requirements in order to enhance
used in branches. The aim was to develop a set of standard
rehabilitation planning
processes to reduce variations in rehabilitation timeframes.
• the Employment Maintenance Programme, which
The new standardised processes include:
addresses treatment needs and vocational issues while
a claimant is recovering from an injury and has resulted
• the way branches deal with mail
in more than 50% of participants returning to work
• the way a new fi le is allocated
• the Work Preparation Programme, which provides
• the way invoices resulting from case management are
physiotherapy, life skills and job search training for
approved for payment
long-term claimants and has achieved direct return to
• case management – initial case management and
work outcomes for a number of claimants and readied a
vocational independence.
signifi cant number for further vocational rehabilitation.
ACC has set standards requiring appointments for medical
Goal 4.4: Timely Individual Rehabilitation
assessments to be conducted within two weeks of the need
Plans
for the assessment being established, and that reports be
provided to ACC within one week. This initiative resulted in
An Individual Rehabilitation Plan (IRP) documents the steps
appointments being arranged and reports being received in
that ACC, the claimant and treatment providers will take to
a more timely fashion.
achieve effective rehabilitation. ACC has further improved
the level of IRP completion and is consistently achieving a
Goal 4.3: Proactive management
signed IRP for more than 95% of the claims where the IRP is
ACC continues to develop tools to improve rehabilitation
required at 13 weeks’ duration.
outcomes for claimants including:
individual rehabilitation plans
% of claim durations within mda guidelines
for claims at 13 weeks’ duration
1,000
100%
100%
90%
800
80%
80%
rmance
o
70%
600
60%
60%
50%
400
40%
vice perf
40%
30%
200
20%
20%
10%
0
0%
0%
tement of ser
Jun 01 Sep 01 Dec 01 Mar 02 Jun 02 Sep 02 Dec 02 Mar 03 Jun 03 Sep 03 Dec 03 Mar 04 Jun 04
a
Jun 01 Sep 01 Dec 01 Mar 02 Jun 02 Sep 02 Dec 02 Mar 03 Jun 03 Sep 03 Dec 03 Mar 04 Jun 04
st
Number of relevant
Accepted and
Percentage
claims crossing
signed IRPs
accepted
% within optimum duration
% within maximum duration
13-week duration
and signed
76
Goal 4.5: Improved rehabilitation outcomes
Rehabilitation rates
Best practice standards
Rehabilitation rates show the percentages of claimants
who return to work or independence within three-month,
The Medical Disability Advisor (MDA) provides international
six-month and 12-month periods from date of injury, for the
guidelines for the length of the recovery process consistent
major weekly compensation accounts. The 12-month rate
with the claimant’s injury and occupation.
is particularly important, as it determines the number of
ACC monitors claim duration relative to optimum and
claims that become long-term.
maximum duration guidelines. During 2003-2004, 58%
Rehabilitation rates are generally improving at three
(2002-2003 – 58%) of claims achieved their optimum MDA
months, refl ecting ACC’s increased focus on early
duration and 75% (2002-2003 – 72%) their maximum MDA
intervention including earlier commencement of
duration, compared with targets of 60% and 70%.
vocational independence processes and follow-up of initial
occupational and medical assessments. Although rates are
steady at six and 12 months, these should improve as the
improvements at three months fl ow through.
2003-2004
2003-2004
2002-2003
3-month rehabilitation rates
r e s u lt
ta rg et
r e s u lt
Employers’ Account
71%
71%
70%
Self-Employed Work Account
59%
58%
57%
Motor Vehicle Account
60%
61%
60%
Earners’ Account
70%
70%
70%
6-month rehabilitation rates
Employers’ Account
86%
87%
85%
Self-Employed Work Account
80%
82%
79%
Motor Vehicle Account
80%
81%
80%
Earners’ Account
87%
88%
87%
12-month rehabilitation rates
Employers’ Account
92%
93%
93%
Self-Employed Work Account
90%
92%
90%
Motor Vehicle Account
89%
89%
89%
Earners’ Account
94%
95%
95%
rehabilitation rates
rehabilitation rates
employers’ account
self-employed work account
100%
100%
st
a
tement of ser
90%
90%
80%
80%
70%
70%
vice perf
60%
60%
o
rmance
50%
50%
Jun 99
Dec 99
Jun 00
Dec 00
Jun o1
Dec 01
Jun 02
Dec 02
Jun 03
Dec 03
Jun 04
Jun 99
Dec 99
Jun 00
Dec 00
Jun o1
Dec 01
Jun 02
Dec 02
Jun 03
Dec 03
Jun 04
3-month Rate
Moving Average
Target
3-month Rate
Moving Average
Target
6-month Rate
Moving Average
Target
6-month Rate
Moving Average
Target
12-month Rate
Moving Average
Target
12-month Rate
Moving Average
Target
77
rehabilitation rates
rehabilitation rates
motor vehicle account
earners’ account
100%
100%
90%
90%
80%
80%
70%
70%
60%
60%
50%
50%
Jun 99
Jun 99
Dec 99
Jun 00
Dec 00
Jun o1
Dec 01
Jun 02
Dec 02
Jun 03
Dec 03
Jun 04
Dec 99
Jun 00
Dec 00
Jun o1
Dec 01
Jun 02
Dec 02
Jun 03
Dec 03
Jun 04
3-month Rate
Moving Average
Target
3-month Rate
Moving Average
Target
6-month Rate
Moving Average
Target
6-month Rate
Moving Average
Target
12-month Rate
Moving Average
Target
12-month Rate
Moving Average
Target
Numbers of long-term claims
long-term weekly compensation claim numbers
ACC forecast that the number of long-term weekly
compensation claims would reduce by 500 during 2003-
25,000
22,500
2004. The reduction for the year to 30 June 2004 was 380.
20,000
17,500
The overall reduction in 2003-2004 was slightly higher
15,000
than the 256 during 2002-2003. The 10% increase in
12,500
weekly compensation claimants reaching 12 months’
10,000
duration on the scheme as a result of increased new
7,500
claims in 2002-2003 has been offset by a signifi cant
5,000
2,500
increase in the number of long-term claimants ceasing
0
to receive weekly compensation.
9
9
0
0
1
1
2
2
3
3
4
Jun 9
Dec 9
Jun 0
Dec 0
Jun o
Dec 0
Jun 0
Dec 0
Jun 0
Dec 0
Jun 0
ACC Total
Employers’ Account
Residual Claims
Motor Vehicle Account
Earners’ Account
number of long-term
number of long-term
d ec r e a s e /
acco u n t
cl aims at 30 june 2004
cl aims at 30 june 2003
( i n c r e a s e )
ACC Total
13,890
14,270
380
Employers’ Account
1,325
1,005
(320)
rmance
o
Self-Employed Work Account
326
295
(31)
Residual Claims Account
5,958
6,862
904
vice perf
Motor Vehicle Account
3,036
3,093
57
Non-Earners’ Account
243
225
(18)
Earners’ Account
2,741
2,553
(188)
tement of ser
Medical Misadventure Account
261
237
(24)
a
st
78
k ey o b j ec t i ve 5: informed decision-making and intervention
d eve lo pm e n t
ACC is increasing its focus on research and evaluation
• separate research projects to identify the reasons
to facilitate the application of new knowledge. This will
for Mäori and Pacifi c peoples having lower claim
provide increased effi ciency and cost-effectiveness of
rates than the general population, to help identify
ACC’s activities through more informed decision-making,
ways to improve Mäori and Pacifi c peoples’ injury
purchasing, development and continual improvement.
rehabilitation outcomes. The Pacifi c research will
focus on three key issues – access, equity and
Goal 5.1: Relevant, quality research
appropriateness. The Mäori-focused research will
ACC signifi cantly increased its investment in research
concentrate on the issue of access.
activity in 2003-2004. A key feature is the use of
Goal 5.2: Relevant, quality evaluation
research agencies and third party providers, and working
collaboratively with other government agencies. Initiatives
ACC and the Department of Labour fi nalised their Joint
begun this year include:
Evaluation Work Programme including key areas and
• a collaborative work programme in partnership
timeframes for evaluations in July 2003. Progress this year
with the Ministry of Social Development to enable
includes the following activities:
the development of complementary programmes
• The
fi rst evaluation of lump sum entitlements was
and services across the two organisations, to assist
completed in March 2004, using information to 31
claimants and clients to improve outcomes and
December 2003. The programme is still immature
overcome barriers preventing their return to work.
and, while the numbers are increasing steadily, they
A literature review and the development of claimant/
remain too small to draw conclusions about the
client profi les have started
programme’s impact.
• an important three-year cross-departmental research
• An evaluation of the Partnership Programme completed
project involving the Ministry of Health, the Health
in December 2003 concluded the programme
Research Council and ACC into the attitudes,
framework was sound. However, it was too early
perceptions and behaviour of Mäori concerning injury
to judge its full effectiveness in achieving positive
treatment, rehabilitation and prevention
improvements to injury prevention, and injury and
• research to investigate the effects of capitation in
rehabilitation management.
primary care, including claim rates, the ratio of ACC to
• An evaluation framework for the New Zealand Injury
non-ACC claim visits, co-payment charges in relation
Prevention Strategy was developed.
to practice pricing, migration to cheaper care, and
funding models
• An evaluation has begun on the quality and
• An evaluation has begun on ACC’s Quality Framework
management of rehabilitation, with a focus on
and Health Services Purchasing Plan and new health
achievement of government objectives underpinning
services purchasing initiatives (such as Rural General
st
a
the rehabilitation framework contained in the Act.
Practitioners and the extension of the Endorsed
tement of ser
Provider Network).
k ey o b j ec t i ve 6:
a l l sta f f a r e p rov i d e d w i t h t h e r i g h t too l s a n d
vice perf
syst e m s to d e l i ve r o u tcom e s
o
rmance
ACC aims to continue to be an employer of choice with
• ensuring relevant training and development
satisfi ed staff working in a supportive environment.
opportunities for staff, including a range of
management and leadership development
Goal 6.1: High staff satisfaction
opportunities for people managers
79
ACC is committed to improving staff satisfaction as it strives
• conducting formal exit interviews with all departing
to be an ‘Employer of Choice’. Since June 2002, there
employees to understand why they are leaving and
has been a steady increase in overall staff satisfaction as
what ACC might be able to do to retain employees.
measured by staff census.
Goal 6.2: Maximise use of technology
ACC’s overall staff satisfaction rating at June 2004 of 73%
Systems availability
compares with 72% at June 2003 and 69% at June 2002,
and exceeds the 70% target. Key results from the June 2004
ACC monitors the availability of corporate systems and
census are:
databases to users. Availability was rated as ‘high’
throughout 2003-2004.
june 2004
june 2003
c e n s u s fac to r
result
result
There were no security breaches of the corporate systems.
Satisfaction with job
72%
71%
A persistent level of attempted breaches was monitored
Satisfaction with manager
75%
74%
but none penetrated the ACC fi rewalls.
Being part of the future of ACC
74%
73%
ACC’s computers were relocated from offi ce-type space
Satisfaction with ACC
72%
72%
into purpose-built computer centres with no interruption to
Staff turnover
services provided.
Annual staff turnover for all ACC staff at June 2004 was
Technology upgrade
13.3%. This is within the target range of 10-15% and
The Corporate Campus computing platform to support
compares with turnover of 12.5% at June 2003.
business unit applications was replaced, providing much
The achievement of the targeted turnover rate refl ects
needed additional storage capacity, and a basis for further
ACC’s commitment to:
rationalising and improving ACC’s mid-range computing
• implementing new recruitment processes, including
needs, including its email system.
using a range of techniques to ensure the best potential
ACC completed a global search for a replacement for the
employees are recruited, enabling ACC to meet its
core claims management system. Work has begun with the
business goals
preferred vendor on a proof-of-concept pilot. This initiative
• continuing to implement ‘Employer of Choice’ brand
forms the most signifi cant element in enabling ACC to meet
strategies, through providing human resources policies
its strategic objectives.
and programmes which support ACC’s staff – including
a remuneration framework to attract and retain talented
ACC selected a Content, Document and Record
staff, implementing a performance management
Management application and work began on deploying the
programme to encourage high performance, and
infrastructure necessary to host the various applications
professional and personal support programmes
that this capability will enable.
A replacement fi nancial management information system
Goal 6.4: A safe workplace
was selected. Implementation has commenced and is
ACC’s WorkSafe health and safety programme is fully
scheduled for completion in late 2004.
implemented in all workplaces to support the physical,
A major upgrade of ACC’s personal computer software (the
psychological and emotional safety of staff.
rmance
o
desktop environment) began this year.
As part of ACC’s WorkSafe programme, all staff who work
closely with claimants have professional supervision to
Goal 6.3: Business excellence
provide support and ensure that case management and
vice perf
ACC operates a business excellence programme based
other work practices are safe, effective and ethical.
on the international Baldrige best business practice
framework. In July 2003, ACC was assessed by authorised
ACC continues to be a leader in managing health and
evaluators aligned to the New Zealand Business
safety at work, refl ected in its attainment of tertiary-level
tement of ser
a
Excellence Foundation (NZBEF) at 332 points against
criteria of the ACC Partnership Programme again this year.
st
the Baldrige framework (the target was 300 points). This
Initiatives this year include:
80
third assessment of ACC’s business maturity showed a
• sponsoring work-life balance initiatives in workplaces
signifi cant increase from the 291 points recorded in the
• sponsoring national and regional health and safety
August 2002 evaluation.
committee meetings.
The results of the next formal evaluation by NZBEF are due
in November 2004. An interim evaluation in February 2004
assessed ACC at 420 points.
k ey o b j ec t i ve 7: partnerships
w i t h
mäori
ACC is committed to developing a coherent set of
Mäori staff satisfaction was measured at 76% in June 2004
principles, policies and practices that contribute to
(75% in June 2003).
enhanced relationships and outcomes for Mäori claimants
Annual staff turnover for Mäori staff was 13.6% as at June
and their communities.
2004. This is within the target range of 10-15% and a slight
Goal 7.1: A co-ordinated approach to Mäori
reduction from 15.3% as at June 2003.
In August 2003, ACC completed its Mäori Development
Goal 7.3: Culturally appropriate and targeted
Policy, which provides a common direction and a framework
service delivery
to focus and co-ordinate ACC activity.
Signifi cant work was done this year to identify areas
The policy outlines the key elements for strategic and
where the needs of Mäori claimants were not being met
operational activity across ACC relating to Mäori claimants
by the available Mäori service providers. Service provision
and communities, ACC internal capacity and culture,
gaps were resolved in medical assessment, home-based
resourcing, provider services and strategic relationships.
rehabilitation, community nursing and vocational
rehabilitation services.
Goal 7.2: Improved internal capacity for Mäori
responsiveness
Access to traditional healing services is being piloted in
three branches.
The number of ACC staff identifying as Mäori increased
from 169 at 30 June 2003 to 205 at 30 June 2004.
Culturally-based injury prevention programmes were
developed for delivery in geographical regions where Mäori
ACC’s Mäori workforce recruitment strategy has been
are over-represented in claim numbers. These are generally
successful in increasing the numbers of Mäori staff working
managed at community level, and cover such areas as
in geographic areas with a high Mäori population or a large
fall prevention initiatives, workplace safety projects,
proportion of Mäori claimants.
distribution of sports resources, delivery of Street Talk
The Mäori and Pacifi c Peoples Communication Strategy and
(road safety) courses and distribution of child restraints.
Action Plan, which aims to increase awareness of the ACC
Scheme and entitlements, is under development.
st
Goal 7.4: Increased Mäori awareness of, and
a
tement of ser
access to, ACC
The brochure
How to Make a Claim to ACC and the
Introduction to the Code of ACC Claimants’ Rights, together
The percentage of new entitlement claims relating to Mäori
with some fact sheets for claimants and child safety
has remained at about 11% over recent years.
literature, are available in Mäori.
vice perf
Recent claims data analysis confi rms that Mäori claim rates
Overall Mäori claimant satisfaction for 2003-2004 was 83%
remain signifi cantly lower than non-Mäori, and supports
(sample = 841, margin of error ±3.4%). This exceeds the
concerns that injured Mäori are not fully accessing ACC
o
2002-2003 result (81%) and ACC’s 80% target.
rmance
support and services.
Research was conducted this year into Mäori attitudes,
perceptions and behaviour in relation to ACC activities, to
81
solicit information to help address lower claim rates, lower
levels of treatment and rehabilitation servicing, and injury
prevention for Mäori.
k ey o b j ec t i ve 8:
i m p rove d r e l at i o n s h i p s w i t h pac i f i c peo pl e s
ACC is committed to improving its relationships with Pacifi c
Goal 8.2: Improved internal capacity to work
peoples, and improving access and delivery of ACC services
with Pacifi c peoples
by addressing their specifi c needs.
The number of ACC staff identifying as Pacifi c peoples
increased from 95 at 30 June 2003 to 114 at 30 June 2004.
Goal 8.1: Awareness of ACC claim processes
and entitlements
ACC monitors the numbers of Pacifi c peoples staff working
The percentage of new entitlement claims relating to Pacifi c
in branches servicing geographic areas with a high Pacifi c
peoples in 2003-2004 was consistent with 2002-2003 at
peoples population or a large proportion of Pacifi c peoples
slightly less than 4%.
claimants.
ACC is working with the Pacifi c Consultancy Group to
Pacifi c peoples staff satisfaction was measured at 77% in
research the reasons for Pacifi c peoples having lower claim
June 2004 (74% in June 2003).
rates than other ethnic populations.
Annual turnover for Pacifi c peoples staff was 15.0% as at
The Mäori and Pacifi c Peoples Communication Strategy
June 2004. This is an increase from 7.0% as at June 2003,
and Action Plan, which aims to increase awareness of the
and at the upper limit of the target range of 10-15%.
ACC Scheme and entitlements, is under development.
Goal 8.3: Culturally appropriate and targeted
The brochure
How to Make a Claim to ACC is available in
service delivery
Cook Island Mäori, Samoan and Tongan. The
Introduction
ACC injury prevention programmes for Pacifi c communities
to the Code of ACC Claimants’ Rights is available in Cook
this year included injuries from falls, motor vehicle crashes,
Island Mäori, Niuean, Samoan and Tongan languages.
assaults and sports. ThinkSafe community projects
Overall Pacifi c peoples’ claimant satisfaction at 30 June
included fall prevention initiatives, workplace safety
2004 was 89% (sample = 217, margin of error ±6.7%),
projects, distribution of sports resources, delivery of Street
signifi cantly higher than the target and 2002-2003 level
Talk (road safety) courses, distribution of child restraints,
of 80%.
water safety, and alcohol and child safety.
Material promoting child safety around the home is
available in Samoan and material promoting the use of
child car restraints is available in Samoan and Tongan.
ACC’s injury prevention programmes were widely promoted
rmance
o
at the ASB Bank Auckland Secondary Schools’ Mäori and
Pacifi c Islands Cultural Festival in March 2004.
vice perf
k ey o b j ec t i ve 9: financial
m a n ag e m e n t
Investment income for 2003-2004 was $497 million, $263
tement of ser
Goal 9.1: Effective and effi cient collection of
a
st
levies
million in excess of the $234 million budget.
82
Levy revenue
Goal 9.3: Controlled expenditure
Levy revenue for 2003-2004 totalled $2,654 million,
Claim costs
$106 million in excess of the Budget of $2,548 million.
The additional revenue includes increased revenue in
Claim costs (treatment, social and vocational rehabilitation,
respect of prior years to the Employers’ and Residual
and compensation entitlements prescribed by the Act
Claims Accounts, and higher than forecast earnings
for claimants) paid during 2003-2004 totalled $1,798
bases and motor vehicle numbers.
million compared with Budget of $1,779 million. This
slight overspend primarily resulted from higher than
Debt management
forecast capitalisation and backpayment of independence
ACC’s debt management function focuses on revenue
allowances. Further details of claim costs are provided
optimisation and improvements to the collection of levy
within the Statement of Financial Performance.
and claimant debt. As well as in-house collection activity,
Administration costs
ACC has continued to work closely with its levy collection
agencies (Inland Revenue, LTSA) and debt collection
ACC’s administration costs were less than Budget for 2003-
agency partners.
2004, primarily as a result of delays in expanding the scale
of injury prevention expenditure, and lower depreciation
Goal 9.2: To achieve returns on investment
due to lower than budgeted capital expenditure.
funds that exceed industry benchmark indices
having regard to the Crown’s risk preferences
ACC was managing $4.9 billion of investments at 30 June
2003 and aims to achieve investment returns at least
equal to market benchmarks plus 1%. Investment returns
during 2003-2004 for ACC’s total reserves exceeded the
benchmarks by 0.7%. Detailed comment on investment
performance is included in the Investments section of the
Report (pages 83-89).
costs by c l a s s i f i c at i o n ( $ m )
2003-2004 actual
2003-2004 budget
va r i a n c e
Injury prevention costs
30.2
32.5
7.1%
Investment costs
7.9
10.5
24.8%
Levy collection costs
52.6
48.5
(8.5%)
Operating costs
218.3
226.0
3.4%
Total administration costs
309.0
317.5
2.7%
14 invest
ments and claims liability c
i n ve stm e n t s a n d c l a i m s
l i a b i l i t y cove r
Why does ACC invest?
An overview of the past year
When ACC collects levies, it is decades before we fi nish
Over the 2003-2004 year, equity markets rose strongly,
paying out the costs that those levies are intended to cover.
but a rise in bond yields resulted in poor returns from
o
v
Many serious injuries require claimants to receive ongoing
long-term bonds.
e
r
rehabilitation, medical care or replacement earnings for
ACC benefi ted from both of these market trends, although
their lifetime.
83
the effect on ACC of the rise in bond yields is complicated:
In the meantime, ACC invests those funds, expecting to earn
• The rise in equity markets benefi ted ACC by boosting
a return. This return reduces the amount of money that the
our investment income.
Corporation needs to put aside to cover our future costs.
• The rise in bond yields decreased ACC’s investment
income by more than $120 million due to a reduction in
What are the risks?
the market value of ACC’s bond holdings. This reduction
By assuming that we will earn a return on our investments,
in market value is treated as a reduction in ACC’s
ACC runs the risk that:
investment income.
1. We may earn less than the expected return in a given
• The rise in bond yields also increased the expected
year (and in some circumstances could suffer a loss
future return on ACC’s funds. This means the funds
on investments). This would be most likely to occur in
ACC requires now to cover our future commitments
years when equity markets are weak.
on existing claims have reduced by $960 million. This
2. We may need to lower our assumption about future
reduction is refl ected in constrained growth in ACC’s
investment returns. This would happen when long-term
claims liability.
bond yields decline.
Overall, investment income was ahead of budget, as the
Either of these events could create a shortfall which
strength in equity markets more than offset the negative
ACC would have to recover by charging higher levies.
impact on investment returns from the rise in bond
Conversely, ACC would benefi t – and we might therefore be
yields. Investment returns were also boosted by ACC
able to reduce levy rates if we earn a higher than expected
outperforming the market returns in most of the areas in
investment return, or if we are able to realistically increase
which we invested.
our assumption about future investment returns.
Asset allocation: why does ACC invest so much
ACC is also exposed to infl ation. The future costs of ACC’s
money in bonds?
commitments to rehabilitating claimants, providing medical
At the end of the fi nancial year, ACC had almost half of our
care and replacing their earnings are tied to wage rates.
reserves portfolios invested in bond markets. ACC’s bond
These costs will grow faster if average wage increases
portfolios are skewed towards longer-term bonds with
prove to be higher than expected. This creates an incentive
more than fi ve years remaining until their maturity date.
for ACC to hold investments which protect us against
infl ation. In essence, ACC’s true risk is potential downside
Due to the poor returns from bond markets over the past
in real investment returns (that is, returns adjusted for
year, it is worthwhile to review the reason why ACC has
infl ation) rather than nominal investment returns (returns
invested so heavily in long-term bonds.
without any adjustment for infl ation).
The biggest single risk to ACC’s ability to fund the future
By contrast, government bonds offer the investor the
costs of existing claims is a decline in interest rates. The
certainty of knowing that short-term price declines will
r
e
v
amount of money that ACC needs to hold now to meet all
always be recovered over the remaining term of the bond.
o
the future costs of existing claims – the discounted claims
Due to the uncertainties of equity returns over even
liability – amounts to only 40 cents for every dollar of
quite long periods of time, ACC tends to maintain a large
future expenditure. We expect to earn the difference – 60
proportion of our investment portfolios in fi xed interest
cents – from investment income, based on our assumption
investments, even when our best estimate is that shares
that we earn an investment return averaging 6.5% per
might outperform fi xed interest investments by a few
annum over the next few decades. If ACC only expected to
percentage points per annum. We generally prefer to hold
earn investment returns equal to infl ation then we would
the bulk of ACC’s fi xed interest investments in long-term
need to fi nd funding of more than 67 cents for each dollar
ments and claims liability c
bonds as a decline in bond yields could dramatically
of estimated future expenditure on existing claims. The
est
increase the amount of funds that ACC needs now to match
inv
increased funding requirement would amount to several
our future claim commitments.
billion dollars.
84
We assume that ACC can earn a future investment return of
aggregate reserves
portfolio breakdown
6.5% per annum because 6.5% is roughly the return that
we can ‘lock in’ by buying the longest maturity government
bonds. Although the short-term return from long-term
government bonds may vary a lot from month to month due
to changes in interest rates, we can be confi dent about the
total return we’ll get over the life of a government bond.
This is because the value of the cashfl ows that investors
will receive from government bonds is certain – it is just the
discount that fi nancial markets apply to these cashfl ows
which fl uctuate from month to month.
By contrast, other classes of investment do not offer us
this certainty. If we invest in shorter-term fi xed interest
Reserves Cash (7%)
Australian Equity Portfolio (8%)
investments, then we may have a high degree of certainty
NZ Index Linked Bonds (6%)
Offshore Bonds (3%)
about the return we will earn over the next year, but we will
NZ Bonds (40%)
Offshore Equity Developed (16%)
have no way of knowing our returns in future years, as they
NZ Equity Portfolio (18%)
Offshore Equity Emerging (1%)
will depend on the future level of interest rates.
NZ Listed Property (1%)
Private Equity/Venture Capital (0%)
Equity investments (shares) do not offer a certain return
for any time period. ACC expects our investments in shares
Compared with other fund managers, ACC tends to invest
to provide a greater return than bonds in the longer-term
a relatively large percentage of our funds in New Zealand
– but we cannot be sure. The future returns from shares
investment markets. There are a number of reasons for this.
will depend on factors such as future dividends, revenue
Firstly, New Zealand investment markets match ACC’s claims
growth, changes in profi t margins and change in the ratio
liabilities better than offshore markets, as ACC’s claims
of market capitalisation to profi tability. Although we may
liabilities are sensitive to real New Zealand bond yields.
make an educated guess for each of these factors, we
Secondly, the internal management and custody costs of
cannot be certain that our estimates are correct. For this
ACC’s New Zealand investments are much lower than the
reason we cannot be sure that shares will outperform
management and custody costs for offshore investments.
bonds, even over 10 or 20 years.
(Custody costs are a fee you pay a ‘custodial bank’ to hold
Another problem with equity investments is that we cannot
shares on your behalf, arrange for purchases and sales to be
necessarily increase our expectation for subsequent returns
settled, provide accounting reports, etc.) Thirdly, we expect
if the market declines, because a decline in the sharemarket
slightly greater long-term returns from New Zealand markets
may indicate that the outlook for future profi ts has declined.
than offshore (due largely to higher yields).
Previously, we have also favoured New Zealand investment
is fully funded, part of our investment income will be used
markets because we believed that ACC had more reason
each year to reduce the amount of scheme expenditure
inv
to feel confi dent about outperforming market benchmarks
that needs to be funded from ACC levies. The rest of the
est
here. Due to the growth in ACC’s investment portfolios
investment income would continue to be reinvested into
ments and claims liability c
relative to the size of New Zealand investment markets, we
the investment portfolios, as these portfolios will need to
no longer believe that this is the case.
grow in line with the increase in costs of providing accident
compensation and rehabilitation to New Zealanders.
Offshore investment markets remain an important part
of ACC’s investment portfolio, as they enable us to
The increasing size of ACC’s reserves portfolios affects how
diversify away from the specifi c risks of New Zealand
we manage ACC’s investment portfolios, as our allocation
investment markets.
to New Zealand investment markets is becoming quite large
relative to the size of those markets. ACC’s total investment
o
Each of ACC’s funding accounts splits our investment funds
v
e
funds are now getting to a size that makes it diffi cult to
r
between an investment in ACC’s short-term ‘cash portfolio’
achieve a better-than-market return on every additional
which is used to meet near-term expenses, and a longer-term
dollar that we invest in New Zealand equity markets. As
85
‘reserves portfolio’ specifi c to that funding account which is
our New Zealand portfolios grow we anticipate that future
set aside to meet the future costs of existing claims.
returns from New Zealand portfolios will not exceed market
The investment allocation of the reserves portfolios differs
returns by the extent that ACC has achieved in the past.
by funding account, refl ecting different funding positions,
How we manage our investment portfolios
different projected growth rates, and the different claims
liability characteristics of ACC’s various funding accounts.
ACC’s internal investment unit directly manages almost all
Generally, rapidly growing funding accounts have higher
of ACC’s investment in New Zealand investment markets,
proportions of their investments in shares than funding
and slightly over half of ACC’s investments in Australia.
accounts that are not expected to record rapid growth in
There are several reasons for this:
investment assets.
1. ACC has suffi cient economies of scale to achieve a
much lower internal management cost than would be
Growth in ACC’s investment portfolios
charged by external fund managers.
Over the past 10 years, ACC’s reserves portfolios have grown
2. Internal management ensures that the investment
ten-fold, from $0.5 billion in 1994 to $5.3 billion in June
process is closely aligned with ACC’s investment
2004. The main reason for this growth was the decision to
objectives (specifi cally, awareness of ACC’s claims
move from a pay as you go scheme to a fully funded scheme
liability) rather than the business objectives of an
that will ultimately hold enough funds to cover all the future
external fund manager.
costs of existing injuries. ACC is now more than halfway
3. ACC’s internal investment unit has achieved better
towards this goal of full funding – our long-term investments
returns in New Zealand asset classes with a higher
are just over half the size of our claims liability.
degree of consistency than other fund managers.
Over the next 10 years, we will grow our long-term
ACC has now been measuring the performance of our
investment portfolios until they slightly exceed the size of
investment portfolios on a market value basis for 12 years,
the claims liability. At the same time, the claims liability is
and in each of these fi nancial years ACC has outperformed
projected to grow roughly in line with growth in the size of
our benchmark indices in both New Zealand Bonds and
the New Zealand economy. As a result, we expect that ACC
New Zealand Equities. We believe that this consistency of
will have about $17 billion of long-term investment funds
investment performance is unique among New Zealand
by 2014.
fund managers.
Until we are almost fully funded, ACC will be adding funds
ACC outsources the management of most of our foreign
to our investment portfolios each year. This means that
assets to external fund management companies as we do
ACC’s reserves portfolios will grow faster than they would if
not have the resources to successfully monitor thousands
ACC merely reinvested our investment income. Once ACC
of global companies and markets.
The Investment Committee of ACC’s Board sets long-term
acc 12-year
nz equity returns
‘benchmark’ investment allocations for each funding
r
e
v
account’s reserves portfolio, based on the advice of
700
o
ACC’s investment unit. ACC’s investment staff are able to
600
make short- or medium-term decisions to vary from these
500
benchmark allocations, within risk control parameters set
ested
400
by the Investment Committee.
300
alue of $100 inv
V
200
100
ments and claims liability c
0
est
Jun 92 Jun 93 Jun 94 Jun 95 Jun 96 Jun 97 Jun 98 Jun 99 Jun 00 Jun 01 Jun 02 Jun 03 Jun 04
inv
12-year ACC return:
12-year benchmark return:
16.80% p.a.
8.91% p.a.
86
acc
acc
12-year
12-year
reserves portfolio returns
nz bond returns
400
300
350
250
300
200
ested
250
ested
200
150
150
alue of $100 inv
alue of $100 inv 100
V
V
100
50
50
0
0
Jun 92 Jun 93 Jun 94 Jun 95 Jun 96 Jun 97 Jun 98 Jun 99 Jun 00 Jun 01 Jun 02 Jun 03 Jun 04
Jun 92 Jun 93 Jun 94 Jun 95 Jun 96 Jun 97 Jun 98 Jun 99 Jun 00 Jun 01 Jun 02 Jun 03 Jun 04
12-year ACC return:
12-year benchmark return:
12-year ACC return:
12-year benchmark return:
10.65% p.a.
8.96% p.a.
8.31% p.a.
7.51% p.a.
i n ve stm e n t r e tu r n s fo r t h e 2003-2004 year
ACC’s reserves portfolios returned an average of 10.8% over
ACC’s reserves portfolios all outperformed the market
the year.
benchmarks against which we measure our portfolios.
However, the magnitude of the outperformance was less
This return was signifi cantly in excess of budget, which
than ACC had achieved in previous years.
was especially pleasing in the context of the rise in bond
yields over the year. A rise in bond yields would normally
The positive relative performance of ACC’s reserves
be expected to result in below-budget returns for ACC’s
portfolios was due to our good relative performance within
reserves portfolios.
most investment markets. However, our allocation between
investment markets subtracted from performance during
Although the aggregate return of 10.8% is strong in absolute
the year as ACC held a lower weighting in equities than the
terms, it is lower than the comparable returns achieved by
percentage provided for in ACC’s portfolio benchmarks.
several other New Zealand fund managers. The main reason
for this is ACC’s policy of maintaining a large exposure to
We enjoyed our strongest relative performance compared
long-duration bonds. Long-duration bonds delivered poor
with the benchmark in listed property stocks. This portfolio
returns due to rises in interest rates over 2003-2004.
represents less than 1% of ACC’s total reserves portfolios.
The key NZ equity and NZ bond portfolios outperformed
a lower percentage of the portfolios that they manage in
their benchmark indices, although by a lesser margin than
North America. This assisted performance in 2003-2004
ACC has enjoyed in previous years. Most of the shares that
due to the weakness of the US dollar and the strength of
ACC held in the NZ equity portfolio rose strongly over the
the Japanese equity market.
inv
est
year, but many New Zealand shares in which ACC had little
We were disappointed by the Australian equity portfolio,
ments and claims liability
or no investment performed just as well.
which underperformed against its benchmark. This was
Our strong relative performance in global equities refl ects
due to underperformance in the portion of the portfolio
a modifi cation we made to the benchmarks we give to the
managed internally by ACC. ACC continued to select
external fund management companies managing our global
Australian stocks using quantitative indicators that had
equities investments. We had reduced the allocation to
worked well in previous years, but these indicators failed
North America included in the portfolio benchmarks, and
to work this year. We are reviewing the way in which we
the external fund managers have correspondingly held
manage this portfolio.
87
a n n ua l p o rt fo l i o r e tu r n s
t h i s ye a r
ave r ag e l a st 3 years
a s s e t c l a s s
$ m i l l i o n
r e tu r n
b e n c h m a r k
re tu r n
b e n c h m a r k
NZ Cash Portfolio
229
5.42%
5.45%
5.76%
5.64%
Reserves
NZ Equity Portfolio
967
21.98%
20.36%
13.30%
9.93%
NZ Private Equity
8
–7.44%
N/A
N/A
N/A
Australian Equity Portfolio
448
22.24%
23.22%
8.72%
6.74%
Reserves Cash
351
5.39%
5.49%
5.58%
5.63%
NZ Bonds
2,141
0.09%
–0.14%
7.78%
7.39%
NZ Listed Property
45
16.87%
10.88%
17.13%
13.11%
NZ Index Linked Bonds
314
–0.37%
–0.49%
9.96%
9.76%
Offshore Bonds
141
6.71%
3.72%
11.71%
10.22%
Offshore Equity – Developed
854
23.60%
20.16%
–4.42%
–5.88%
Offshore Equity – Emerging
39
22.67%
23.08%
0.30%
–2.85%
Total Reserves
5,308
10.77%
10.08%
8.82%
6.84%
r e s e rve s p o rt fo l i o r e tu r n s by fu n d
Residual Claims
685
8.08%
7.36%
8.63%
7.04%
Motor Vehicle
1,110
11.84%
11.09%
8.91%
6.50%
Earners’
1,889
9.07%
8.38%
8.77%
6.76%
New Employers’
796
13.97%
13.58%
7.33%
4.93%
Self-Employed
140
15.56%
14.51%
7.93%
5.31%
Non-Earners’
459
16.00%
14.16%
N/A
N/A
Medical Misadventure
229
11.84%
11.32%
N/A
N/A
Currency hedging
Investment benchmarks
r
Over the past year, ACC again avoided signifi cant potential
Like most other fund managers, ACC uses market-based
e
v
o
losses by hedging the majority of our foreign currency
benchmark indices to serve as a point of comparison when
assets. These hedging gains of slightly over $55 million
considering the make-up and the performance of our
were not due to ACC bravely anticipating the big gains in
investment portfolios. These benchmarks indicate how ACC
the New Zealand dollar over the past year and undertaking
might invest our funds if we did not have any views on the
a huge ‘active’ currency trade. Rather, ACC had adopted
likely relative performance of different securities within a
a policy of hedging the majority of our foreign exchange
market. Accordingly, it is important that the benchmarks
exposures based on an analysis of its risks and our
represent sensible starting points for the construction
expectation that over the very long-term the New Zealand
of portfolios that meet ACC’s needs. In many cases, a
ments and claims liability c
dollar would not decline by quite as much as was priced
recognised market benchmark is appropriate for ACC, but in
est
into fi nancial markets.
other cases we manage ACC’s portfolios against a different
inv
benchmark. For example, the high interest sensitivity of
In the second half of the 2003-2004 year, ACC increased our
88
ACC’s claims liabilities means that ACC has a need for a
exposure to unhedged foreign exchange exposure, as we
highly interest-rate-sensitive bond portfolio, so we manage
concluded that the New Zealand dollar had risen to a point
the New Zealand bond portfolio against a customised
from which it was quite likely to decline at a faster rate than
benchmark index that is heavily skewed towards bonds
was priced into fi nancial markets.
with more than fi ve years remaining to maturity.
Although ACC frequently reviews our hedging policies, it
As well as indicating a neutral starting point for managing
is anticipated that ACC will always maintain some foreign
our portfolios, benchmark indices are useful for assessing
exchange hedging. There will inevitably be some years in
portfolio performance. This is because they allow us to
which the New Zealand dollar shows signifi cant declines,
differentiate the part of a portfolio’s returns that is due
and ACC is likely to lose money on our currency hedging
to generalised market conditions from the relative value
when this occurs. However, when the New Zealand dollar
that has been added or subtracted in the management
declines it is unlikely that ACC would ever lose as much
of that portfolio. For these purposes, it is important that
from hedging as it gains from the currency-affected
we measure the performance of benchmark indices in
revaluation of our offshore investments. In hedging a
the same way as the performance of our portfolios. For
portion of our foreign exchange exposures, ACC’s primary
example, ACC does not get any benefi t from imputation tax
objective is simply to reduce the potential variability of our
credits so, unlike most New Zealand fund managers, we
investment returns.
do not include the gross value of imputation tax credits in
our reported investment returns. This means we need to
Private equity
also exclude the grossed-up value of imputation tax credits
ACC holds a small investment in private (unlisted) equity,
from the performance of the benchmark index that we use
including both direct investments by ACC and investment
to help gauge the performance of the New Zealand equity
in four of the venture capital funds that are participating
portfolio.
in the scheme operated by the New Zealand Venture
Investment Fund. These investments represent a very small
Probability of negative returns
proportion of ACC’s investment portfolios, partly because
Although ACC has consistently managed to achieve positive
private equity investing is relatively new to ACC and we
returns in each fi nancial year in a wide range of market
want to limit our exposure until we become more familiar
conditions, it is important that stakeholders understand
with it. As there is no market price for private equity
that there is always a risk that ACC could report negative
investments, it is diffi cult to value and calculate short-term
returns over a single fi nancial year. We calculate that there
returns for investments in this asset class.
is about a one in fi ve chance that ACC will record negative
reserves portfolio returns in any single fi nancial year.
Statistical analysis would suggest that in any given year
2. Based on our current policy, ACC’s funding accounts
there is less than a 2% probability that ACC will record
will typically have an average of 46% of their reserves
inv
returns of -10% or worse. However, this analysis relies
funds invested in equity markets. This means that a
est
upon the critical assumption that we can make inferences
generalised decline in foreign and domestic equity
ments and claims liability c
about the probability of extreme future events based on a
markets of around 9% or more would tend to result in
statistical analysis of recent history, so it is wise to assume
ACC recording negative overall investment returns.
that the probability of negative returns of this magnitude
Generally, ACC’s investments in individual companies or
could be higher than 2%.
securities are too small to signifi cantly endanger total
There are two primary factors that contribute to the risk of
investment returns in a single fi nancial year. ACC holds only
negative returns:
one equity investment of more than $100 million. The only
1. A rise in bond yields of about one percentage point
credit exposures of more than $100 million are to the New
o
v
could result in ACC recording negative investment
Zealand Government and some major New Zealand banks.
e
r
returns. However, ACC’s overall funding position would
improve as a result of this decline in bond yields, as
89
our claims liability would decrease by an even greater
amount than the decline in investment income.
5 0 l a rg e st equ i t y i n ve stm e n t s a s at 30 june 2004
$ m i l l i o n
$ m i l l i o n
Telecom Corporation of NZ
176.3
News and Media NZ
11.7
Fletcher Building
63.4
Nuplex
11.6
Fisher and Paykel Healthcare
53.1
Royal Dutch Petroleum/Shell
11.3
Independent Newspapers
52.3
Natural Gas Corporation
10.8
Westpac
43.6 Vodafone
10.7
Auckland International Airport
36.0
Steel and Tube
10.7
Contact Energy
35.6
Mainfreight
10.6
Carter Holt Harvey
33.0
Michael Hill International
9.7
Fisher and Paykel Appliances
33.0
Macquarie Goodman Properties
9.2
Sky City
32.0
Woolworths (Australia)
9.0
DB Breweries
31.3
HSBC Holdings
8.8
ANZ Bank
29.1
QBE Insurance Group
8.8
Guinness Peat Group
25.5
Toyota Motor
8.4
News Corporation
24.4
Total SA
8.2
The Warehouse
24.0
AMP
8.1
Tenon Limited
22.3
Insurance Australia Group
7.7
Telstra Corporation
21.1
Templeton Emerging Markets
7.6
Kiwi Income Property
19.9
Novartis
7.5
Commonwealth Bank
19.5
Ports of Auckland
7.5
BHP Billiton
19.5
Hellaby Holdings
7.1
National Australia Bank
16.2
St George Bank
7.0
Air New Zealand
13.5
Nufarm
6.8
Promina
12.3
Microsoft Corporation
6.6
Infratil
12.1
General Electric Company
6.5
BP
12.1
Waste Management NZ
6.3
c l a i m s l i a b i l i t y
r
e
v
o
What is the ACC claims liability?
• It is also impossible to predict how much additional
help a claimant may need in terms of medical treatment
Every year, ACC has to estimate the future claim payments
(including surgery) and rehabilitation. Also, the costs
it will need to make for all the injuries that have happened
of various treatments can change (they usually go up)
in the past. The estimate of the total discounted amount
and new (and often expensive) treatments become
of all future claim payments for all past injuries is the
available. On the other hand, ACC is getting better at
ACC claims liability. (The discounting reduces the
targeting the type of help a particular claimant needs
outstanding claims liability in light of ACC’s expected
ments and claims liability c
and this should lead to shorter claim duration, and the
investment returns.)
est
removal of unnecessary costs.
inv
The ACC claims liability is not like a liability in an
• Court decisions may change an interpretation of the
ordinary company’s balance sheet because it is not a
90
Act under which ACC operates and then change the
known quantity. The ACC claims liability is an estimate
entitlements to particular groups of claimants.
of the amount of money needed to settle all past claims
and there is signifi cant uncertainty in the estimate.
How is the ACC claims liability estimated?
The estimate of the liability is unbiased in the sense
By examining the reporting delay patterns it is possible to
that it does not contain any deliberate optimism or
build statistical and actuarial models of the claim reporting
conservatism. Such an estimate is typically described as a
process so that the ultimate number of claims arising in
‘best’ estimate.
each injury year can be estimated. For ‘older’ injury years
most of the claims incurred will have been reported and our
Why is the ACC claims liability an estimate?
estimates of ultimate numbers of claims for these years will
It is impossible to know exactly how much money needs
be reasonably accurate. For more recent years the estimate
to be set aside to settle all past claims and there are many
of the ultimate number of claims incurred will be more
reasons why the liability is uncertain. The more important
uncertain because a signifi cant number of injuries will not
reasons include:
yet have been reported.
• It takes a long time before all the injuries in any past
By subtracting the number of past claims that have already
year are reported. Some injuries/conditions can take a
been reported from the estimate of the ultimate number
long time to appear. An extreme example is the onset of
of claims incurred, we get an estimate of the number of
asbestosis, which may not appear for over 20 years. At
claims that have been incurred but not (yet) reported. ACC
the time that people were being exposed to asbestos,
needs to make an allowance for these ‘incurred but not
it was not widely known that it was so harmful. This
reported’ (IBNR) claims. For each of the claims that have
means there could be many more claims in the future
been reported in the past that are still active (receiving
than those already reported.
claim payments), we need to estimate how much the future
• Even for those claims that have already been reported,
claim payments will be. By applying statistical and actuarial
there is uncertainty as to how long it may take to
techniques to ACC’s data on claim payment histories
recover. For more serious injuries, employed claimants
and using other relevant information about the future,
receive weekly compensation while they cannot work.
ACC can estimate the projected future claim payments
Therefore, the longer they are on the ACC Scheme, the
for all active claimants. These claim payments are for
more money they need to be paid and the larger the
weekly compensation, medical treatments, rehabilitation,
liability for those people. Some seriously injured people
independence allowance, lump sums and death benefi ts.
might stay on weekly compensation for over 40 years.
The weekly benefi t is adjusted annually for future wage
Some injuries can recur and it is necessary to recognise the
infl ation and this is another source of uncertainty.
possibility that some claims will be reopened. The claims
Weekly compensation accounts for about 40% of the
liability includes payments expected to be made on claims
ACC claims liability.
that will reopen.
Once all the future claim payments have been estimated
Why does the ACC claims liability change?
and projected, it is necessary to discount these projected
inv
Each year the ACC claims liability is re-calculated based on
cash fl ows to allow for investment returns (to calculate
est
the most up-to-date information and Scheme experience.
the present value of the projected future claim payments).
ments and claims liability c
This latest information is used to review the trends in
Investment returns are a signifi cant factor in reducing the
experience, which may alter the assumptions regarding
amount of the liability because the projected cash fl ows
future benefi t payments. These assumptions include:
extend a long way out into the future.
• claim duration (how long claimants take to be
The liability amount can be thought of as the lump sum
rehabilitated)
invested now that will be suffi cient to pay all future claim
• claim costs (changes in future expected claim
payments for injuries that occurred before the liability
payments)
valuation date. For this to be exactly the right amount the
o
v
assumptions used to estimate the liability must be exactly
• infl ation (wage and cost infl ation)
e
r
borne out in practice. This is almost certainly not going to
• interest rates (earnings from assets invested).
be the case but the estimated liability should be close to
91
Changes to any of these assumptions will affect the
the amount required. Investment returns on this lump sum
resulting ACC claims liability. For example, if the interest
compounding over many years reduce the amount that
rate assumption is reduced, the expectation is that future
needs to be held.
investment returns will be less and therefore ACC will
The assumption bases used in the actuarial and statistical
need to hold more funds to cover future expected claim
models are set by reference to the relevant accounting and
payments (the ACC claims liability will increase).
actuarial professional standards for New Zealand-based
Any change in the aforementioned assumptions will have a
general insurers. Compliance with these professional
fl ow-on effect in respect of the expected fully funded cost
standards is mandatory in New Zealand.
of claims arising in the next levy year. The expected fully
By using the above approach, ACC obtains a ‘fully funded’
funded cost of claims forms the basis of the levy rates ACC
estimate of the claims liability. A liability is calculated on a
sets annually. Levy rates are also impacted by changes in:
‘fully funded’ basis if all future claim payments arising out
• the number of claims expected
of past injuries are taken into account, not just the claim
• the amount of earnings, or the number of motor
payments expected in the next fi nancial year. Consequently,
vehicles which are levied to cover the cost of claims
a fully funded estimate of the liability is representative of
• the level of reserves (the level of funds in each of the
the true cost of providing injury cover.
ACC accounts compared with what is required to pay
Does ACC take external advice on the liability
the future costs of claims already incurred).
valuation?
ACC uses external actuarial consultants to help with
the valuation of the liability. This year ACC used
PricewaterhouseCoopers as a result of their winning
the recent tender to provide actuarial advice to ACC.
PricewaterhouseCoopers have extensive experience with
the ACC Scheme in New Zealand and many other accident
compensation schemes overseas (especially Australia).
ACC follows the Financial Reporting Standards (FRS-35) in
determining the value of its liabilities.
15
f i n a n c i a l stat e m e n t s fo r
t h e ye a r e n d e d 30 june 2004
tements
a
co n t e n t s
financial st
1 .
s tat e m e n t o f a c c o u n t i n g p o l i c i e s
93
92
2 .
s tat e m e n t o f f i n a n c i a l p e r f o r m a n c e
97
3 .
s tat e m e n t o f m ov e m e n t s i n a c c o u n t r e s e r v e s ( e q u i t y )
100
4 .
s tat e m e n t o f f i n a n c i a l p e r f o r m a n c e a n d m ov e m e n t s
i n a c c o u n t r e s e r v e s ( b y a c c o u n t )
101
5 .
s tat e m e n t o f f i n a n c i a l p o s i t i o n
108
6 .
s tat e m e n t o f c a s h f lo w s
110
7 .
s tat e m e n t o f c o m m i t m e n t s
112
8 .
s tat e m e n t o f c o n t i n g e n t l i a b i l i t i e s
112
9 .
n ot e s to t h e f i n a n c i a l s tat e m e n t s
113
1 0 .
s tat e m e n t o f r e s p o n s i b i l i t y
128
1 1 .
r e p o r t o f t h e o f f i c e o f t h e a u d i to r - g e n e r a l
129
1 2 .
r e m u n e r at i o n o f e m p loye e s
130
1 3 .
c o m pa r at i v e s tat e m e n t o f f i n a n c i a l p e r f o r m a n c e
131
1 4 .
c o m pa r at i v e s tat e m e n t o f f i n a n c i a l p o s i t i o n
133
1 5 .
d i s c lo s u r e o f t h e i m pa c t o f a d o p t i n g n e w z e a l a n d
e q u i va l e n t s to i n t e r n at i o n a l f i n a n c i a l r e p o r t i n g
s ta n d a r d s
134
statement of accounting policies
for the year ended 30 june 2004
a) Reporting Entity
The fi nancial statements are those of the Accident Compensation Corporation (ACC) which is designated as a Crown
entity under the Public Finance Act 1989.
ACC and its subsidiaries comprise the ACC Group.
financial st
The fi nancial statements have been prepared in accordance with the:
a) Public Finance Act 1989 – Part V.
b) Financial Reporting Act 1993.
a
tements
c) Accident Insurance Act 1998. It was replaced by the Injury Prevention, Rehabilitation, and Compensation Act 2001
passed in September 2001, which came into effect on 1 April 2002.
d) Accident Insurance (Transitional Provisions) Act 2000.
e) Injury Prevention, Rehabilitation, and Compensation Act 2001 (referred to hereafter as the Act).
93
b) Measurement Base
The fi nancial statements are prepared on the basis of historical cost except where modifi ed by the revaluation of
investments and certain property, plant and equipment 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’, Employers’, Self-Employed Work, Motor Vehicle and Medical
Misadventure Accounts. The Non-Earners’ Account has 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 the claims liability at 30 June 1999 in respect of the Residual
Claims, Earners’ and Motor Vehicle Accounts respectively. It is expected that these residual levies will be charged until
these Accounts are fully funded, anticipated to be until 2014. The Medical Misadventure Account is also expected to be
fully funded to meet the claims liability at 30 June 1999 by 2014.
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:
a) Residual levies from employers on the earnings of their employees.
b) Residual levies from earners who are self-employed.
These funds are applied in accordance with the Act in respect of accidents prior to 30 June 1999 that are:
a) Non-work injury (other than motor vehicle injury) suffered by an earner on or after 1 April 1974 and before 1 July 1992.
b) Work injury other than motor vehicle suffered on or after 1 April 1974.
Note: The Residual Claims Account was the Employers’ Account prior to 1 July 1999.
(ii) Self-Employed Work Account
The Self-Employed Work Account derives its funds from earners who are self-employed. These funds are applied in
accordance with the Act in respect of accidents on or after 1 July 1999.
(iii) Motor Vehicle Account
The Motor Vehicle Account derives its funds from:
a) Levies and residual levies on motor vehicle ownership.
b) 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.
statement of accounting policies
for the year ended 30 june 2004
(iv) 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.
This Account has previously been managed on a ‘pay as you go basis’ while the claims liability cost (both current and
future) is recognised in the year the injury occurs. From 1 July 2001 this has continued in respect of claims incurred on
or before 30 June 2001, while new claims from 1 July 2001 are fully funded.
tements
a
(v) 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
financial st
motor vehicle injury) suffered on or after 1 July 1992.
94
(vi) Medical Misadventure Account
The Medical Misadventure 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 that derives from medical
misadventure suffered on or after 1 July 1992.
(vii) Employers’ Account
The Employers’ Account was created on 1 April 2000. This Account derives its funds from employers who were
covered by ACC from 1 April 2000, and from all employers on and after 1 July 2000.
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.
e) Allocation of Indirect Income and Expenditure
Indirect income and expenditure are allocated to each Account as follows:
(i) Investment income
Allocated based on the investment balances of the respective Accounts.
(ii) Indirect operating cost
Allocated based on the operating activities undertaken for each Account.
f ) Levy and Residual Levy Income
All levy and residual levy income is recognised in the period to which it relates.
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:
(i) Claims notifi ed and accepted in the current and previous years, but which will not be met until future years.
(ii) Claims incurred but not notifi ed to, or accepted by, ACC at balance date.
h) Consolidation of Subsidiaries
The group 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 10.
statement of accounting policies
for the year ended 30 june 2004
i) 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 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
financial st
market value are credited or charged to the Statement of Financial Performance by Account in accordance with the basis
used for allocating investment income.
Interest income is recognised in the Statement of Financial Performance as it accrues. Dividend income is recognised in
a
the Statement of Financial Performance on the date that the dividend is declared or, where more appropriate, on the last
tements
date to register for the dividend.
j) Financial Instruments
ACC has various fi nancial instruments with off-balance sheet risk which are used to reduce ACC’s exposure to fl uctuations
95
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.
The fi nancial instruments are valued at market value, and the gains or losses from fi nancial instruments are recognised in
the Statement of Financial Performance as revenue or expense items as they arise.
k) 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.
l) 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.
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.
m) 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. 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
statement of accounting policies
for the year ended 30 june 2004
n) Statement of Cash Flows
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.
(ii) Investing activities are those activities relating to the acquisition, holding and disposal of property, plant and
financial st
equipment and investments. Investments include securities not falling within the defi nition of cash. Income received
in relation to investing activities is included in operating activities.
(iii) Financing activities are activities which result in changes in the size and composition of ACC’s capital structure.
tements
a
(iv) Operating activities include all transactions and other events that are not investing or fi nancing activities. Investment
a
tements
income and realised gains and losses on the disposal of investments are included in operating surplus and as
investing activities in the Statement of Cash Flows.
financial st
o) Income Tax
96
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.
p) Employee Entitlements
A liability for annual leave and long service 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.
q) 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.
r) Receivables
Receivables are stated at their estimated realisable value.
s) Budget Figures
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 2003 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.
t) 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.
u) Comparatives
To ensure consistency with the current period, comparative fi gures have been restated where appropriate.
group statement of fi
nancial performance
for the year ended 30 june 2004
group
group
group
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
financial st
Net levy income
Residual Claims Account
215,825
196,669
203,661
Motor Vehicle Account
564,071
515,453
414,827
a
Non-Earners’ Account
574,396
580,758
610,457
tements
Earners’ Account
673,895
657,342
692,064
Self-Employed Work Account
96,531
125,089
122,491
Employers’ Account
460,202
403,661
424,038
Medical Misadventure Account
69,540
68,984
106,738
97
Total net levy income
1&3
2,654,460
2,547,956
2,574,276
Net levy income has increased by 3.1% over last year. This is mainly due to:
(i)
an increase in the ACC levy portion of the excise duty on petrol
(ii)
more New Zealanders being in work and earning more.
expenditure
Rehabilitation expenditure
Vocational rehabilitation
34,445
25,003
23,221
Social rehabilitation
238,488
230,251
222,902
Medical treatment
278,093
265,586
253,240
Hospital treatment
119,010
109,871
114,759
Public health acute services
268,934
289,376
268,336
Dental treatment
12,030
11,518
11,452
Conveyance for treatment
41,358
43,891
45,501
Backdated attendant care
7
(2,162)
-
328
Miscellaneous claim costs
7,309
8,792
11,155
997,505
984,288
950,894
Compensation expenditure
Income maintenance
640,292
633,405
612,102
Independence allowances
73,765
48,997
34,813
Lump sums
8,344
24,134
1,116
Death benefits
77,968
88,086
104,629
800,369
794,622
752,660
Total claim costs
1,797,874
1,778,910
1,703,554
Total claim costs have increased by 5.5% over last year due to increases in claim numbers, infl ation, increased emphasis on
vocational rehabilitation and increased capitalised payments for independence allowances partly offset by reduced lump sum
commutation payments for death benefi ts.
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
group statement of fi
nancial performance (continued)
for the year ended 30 june 2004
group group group
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
Operating costs
4
219,498
228,025
199,514
tements
a
Injury prevention costs
30,210
32,506
23,578
Collection costs
52,564
48,466
51,762
financial st
Total expenditure
2,100,146
2,087,907
1,978,408
98
Operating surplus before adjustment to claims liability
554,314
460,049
595,868
Adjustment to claims liability
21
169,903
507,186
1,650,519
The increase in interest rate has had a signifi cant favourable impact on the claims liability. Partly offsetting this is higher than expected
number of claims and weekly compensation costs.
Surplus/(deficit) from underwriting activities after
adjustment to claims liability
384,411
(47,137)
(1,054,651)
Net investment income
2&3
489,425
224,019
437,025
The funds invested achieved a 10.8% return for the Reserves Portfolio and 5.4% for the Cash Portfolio. Both of these returns are ahead
of market benchmarks and the overall return is ahead of the budgeted return of 4.96%.
Other income
3
2,012
2,562
2,042
Surplus/(deficit) before tax
875,848
179,444
(615,584)
Income tax (credit)/expense 5
(72)
138
(101)
Net surplus/(deficit) after tax
875,920
179,306
(615,483)
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
parent statement of fi
nancial performance
for the year ended 30 june 2004
parent
parent
parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
financial st
Net levy income
Residual Claims Account
215,825
196,669
203,661
Motor Vehicle Account
564,071
515,453
414,827
a
Non-Earners’ Account
574,396
580,758
610,457
tements
Earners’ Account
673,895
657,342
692,064
Self-Employed Work Account
96,531
125,089
122,491
Employers’ Account
460,202
403,661
424,038
Medical Misadventure Account
69,540
68,984
106,738
99
Total net levy income
1&3
2,654,460
2,547,956
2,574,276
expenditure
Rehabilitation
expenditure
Vocational rehabilitation
34,445
25,003
23,221
Social rehabilitation
238,488
230,251
222,902
Medical treatment
278,093
265,586
253,240
Hospital treatment
119,010
109,871
114,759
Public health acute services
268,934
289,376
268,336
Dental treatment
12,030
11,518
11,452
Conveyance for treatment
41,358
43,891
45,501
Backdated attendant care
7
(2,162)
-
328
Miscellaneous claim costs
7,309
8,792
11,155
997,505
984,288
950,894
Compensation
expenditure
Income maintenance
640,292
633,405
612,102
Independence allowances
73,765
48,997
34,813
Lump sums
8,344
24,134
1,116
Death benefits
77,968
88,086
104,629
800,369
794,622
752,660
Operating costs
4
218,256
226,014
198,226
Injury prevention costs
30,210
32,506
23,578
Collection costs
52,564
48,466
51,762
Total expenditure
2,098,904
2,085,896
1,977,120
Operating surplus before adjustment to claims liability
555,556
462,060
597,156
Adjustment to claims liability
21
169,903
507,186
1,650,519
Surplus/(deficit) from underwriting activities after
adjustment to claims liability
385,653
(45,126)
(1,053,363)
Net investment income
2&3
489,425
224,019
437,025
Other income
3
997
887
1,059
Net surplus/(deficit)
876,075
179,780
(615,279)
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
group statement of movements in account reserves (equity)
for the year ended 30 june 2004
group group group
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
Account reserves – opening balance (deficit)
(4,251,865)
(4,251,865)
(3,636,415)
Recognised revenues and expenses for the year
tements
a
Net surplus/(deficit) after tax
875,920
179,306
(615,483)
Increase in asset revaluation reserves
19
904
-
-
Total recognised revenues and expenses for the year
876,824
179,306
(615,483)
financial st
Other movements
100
Amalgamation of the Non-Compliers Fund
23
-
-
33
Account reserves – closing balance (deficit)
(3,375,041)
(4,072,559)
(4,251,865)
parent statement of movements in account reserves (equity)
for the year ended 30 june 2004
parent
parent
parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
Account reserves – opening balance (deficit)
(4,251,546)
(4,251,546)
(3,636,300)
Recognised revenues and expenses for the year
Net surplus/(deficit)
876,075
179,780
(615,279)
Increase in asset revaluation reserves
19
904
-
-
Total recognised revenues and expenses for the year
876,979
179,780
(615,279)
Other movements
Amalgamation of the Non-Compliers Fund
23
-
-
33
Account reserves – closing balance (deficit)
(3,374,567) (4,071,766) (4,251,546)
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
statement of fi
nancial performance and movements in account reserves (equity)
for the year ended 30 june 2004
parent
parent
parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
financial st
residual claims account
Net levy income
Residual levy*
215,825
196,669
203,661
a
tements
Total net levy income
215,825
196,669
203,661
expenditure
Rehabilitation
expenditure
101
Vocational rehabilitation
5,948
4,663
6,114
Social rehabilitation
38,832
29,723
33,085
Medical treatment
13,798
10,792
11,512
Hospital treatment
8,309
6,223
9,327
Dental treatment
1,378
1,190
1,392
Conveyance for treatment
690
612
803
Backdated attendant care
7
154
-
148
Miscellaneous claim costs
1,875
1,776
4,325
70,984
54,979
66,706
Compensation
expenditure
Income maintenance
193,374
192,497
207,965
Independence allowances
12,694
8,268
5,522
Lump sums
394
-
(167)
Death benefits
16,498
24,051
28,932
222,960
224,816
242,252
Operating costs
4
33,392
32,998
34,093
Collection costs
6,045
5,477
7,624
Total expenditure
333,381
318,270
350,675
Operating (deficit) before adjustment to claims liability
(117,556)
(121,601)
(147,014)
Adjustment to claims liability 21
(78,535)
(172,679)
112,432
Surplus/(deficit) from underwriting activities after
adjustment to claims liability
(39,021)
51,078
(259,446)
Net investment income
68,769
34,245
95,109
Other income
109
111
142
Net surplus/(deficit)
29,857
85,434
(164,195)
Account reserve – opening balance (deficit)
(1,443,107) (1,443,107) (1,278,912)
Net surplus/(deficit)
29,857
85,434
(164,195)
Account reserve – closing balance (deficit)
(1,413,250)
(1,357,673)
(1,443,107)
* Higher earnings base from employers resulted in an increase in income in this Account from last year. This is partly offset by a decrease in the average levy
rate from $0.31 in the 2003-2004 tax year to $0.30 in the 2004-2005 tax year.
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
statement of fi
nancial performance and movements in account reserves (equity)
for the year ended 30 june 2004
parent
parent
parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
motor vehicle account
tements
Net levy income
a
Levy income from motor licensing
204,686
195,453
189,580
Levy income from petrol premium
151,369
138,090
61,804
Residual levy
208,016
181,910
163,443
financial st
Total net levy income*
564,071
515,453
414,827
102
expenditure
Rehabilitation
expenditure
Vocational rehabilitation
4,624
3,805
3,229
Social rehabilitation
68,769
66,579
62,961
Medical treatment
12,835
11,432
10,389
Hospital treatment
8,238
7,926
7,670
Public health acute services
39,318
41,848
39,229
Dental treatment
758
746
759
Conveyance for treatment
8,436
8,002
8,548
Backdated attendant care
7
(951)
-
(1,787)
Miscellaneous claim costs
1,325
1,740
1,592
143,352
142,078
132,590
Compensation
expenditure
Income maintenance
100,741
98,246
100,648
Independence allowances
13,628
9,395
6,051
Lump sums
2,196
5,438
408
Death benefits
38,543
37,363
53,075
155,108
150,442
160,182
Operating costs
4
27,281
28,930
25,572
Injury prevention costs
6,072
5,656
5,753
Collection costs
10,881
11,050
10,145
Total expenditure
342,694
338,156
334,242
Operating surplus before adjustment to claims liability
221,377
177,297
80,585
Adjustment to claims liability
21
100,641
72,788
500,274
Surplus/(deficit) from underwriting activities after
adjustment to claims liability
120,736
104,509
(419,689)
Net investment income
98,689
43,191
79,619
Other income
190
132
190
Net surplus/(deficit)
219,615
147,832
(339,880)
Account reserve – opening balance (deficit)
(1,776,549) (1,776,549) (1,436,669)
Net surplus/(deficit)
219,615
147,832
(339,880)
Account reserve – closing balance (deficit)
(1,556,934)
(1,628,717)
(1,776,549)
* The ACC levy portion of the excise duty on petrol has increased from 2.1 cents to 5.08 cents per litre resulting in higher income.
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
statement of fi
nancial performance and movements in account reserves (equity)
for the year ended 30 june 2004
parent
parent
parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
financial st
non-earners’ account
Net levy income
Levy income appropriated by Parliament*
605,689
611,801
658,489
a
tements
Less funding of Medical Misadventure Account
(31,293)
(31,043)
(48,032)
Total net levy income
574,396
580,758
610,457
expenditure
103
Rehabilitation
expenditure
Vocational rehabilitation
581
370
485
Social rehabilitation
78,998
81,633
79,426
Medical treatment
102,160
102,957
100,163
Hospital treatment
30,739
28,009
29,442
Public health acute services
160,796
172,866
160,462
Dental treatment
5,776
5,745
5,595
Conveyance for treatment
18,982
21,617
22,369
Backdated attendant care
7
(2,138)
-
1,812
Miscellaneous claim costs
1,002
545
550
396,896
413,742
400,304
Compensation
expenditure
Income maintenance
6,908
6,359
11,423
Independence allowances
29,621
18,339
14,997
Lump sums
1,296
6,683
429
Death benefits
2,466
3,726
2,639
40,291
35,107
29,488
Operating costs
4
26,844
28,478
24,383
Injury prevention costs
6,223
7,249
5,800
Total expenditure
470,254
484,576
459,975
Operating surplus before adjustment to claims liability
104,142
96,182
150,482
Adjustment to claims liability 21
(13,622)
127,008
344,692
Surplus/(deficit) from underwriting activities after
adjustment to claims liability
117,764
(30,826)
(194,210)
Net investment income
46,233
19,345
26,985
Other income
7
103
14
Net surplus/(deficit)
164,004
(11,378)
(167,211)
Account reserve – opening balance (deficit)
(1,122,207)
(1,122,207)
(954,996)
Net surplus/(deficit)
164,004
(11,378)
(167,211)
Account reserve – closing balance (deficit)
(958,203) (1,133,585) (1,122,207)
* With the reduction in interest rate impacting favourably on the claims liability, lower funding is required.
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
statement of fi
nancial performance and movements in account reserves (equity)
for the year ended 30 june 2004
parent
parent
parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
earners’ account
tements
Net levy income
a
Levy income*
704,495
683,553
731,232
Residual levy
7,647
11,730
19,538
Less funding of Medical Misadventure Account
(38,247)
(37,941)
(58,706)
financial st
Total net levy income
673,895
657,342
692,064
104
expenditure
Rehabilitation
expenditure
Vocational rehabilitation
11,897
8,897
7,210
Social rehabilitation
22,843
21,766
21,270
Medical treatment
99,748
93,740
88,614
Hospital treatment
50,742
48,307
48,061
Public health acute services
44,912
48,810
44,864
Dental treatment
3,392
3,134
3,060
Conveyance for treatment
9,199
9,444
9,473
Backdated attendant care
7
928
-
-
Miscellaneous claim costs
1,251
1,606
1,410
244,912
235,704
223,962
Compensation expenditure
Income maintenance
189,693
188,852
166,356
Independence allowances
12,048
8,216
5,709
Lump sums
1,692
4,206
293
Death benefits
13,008
15,492
13,914
216,441
216,766
186,272
Operating costs
4
73,550
75,488
65,615
Injury prevention costs
6,465
7,086
5,541
Collection costs
18,187
19,338
19,735
Total expenditure
559,555
554,382
501,125
Operating surplus before adjustment to claims liability
114,340
102,960
190,939
Adjustment to claims liability
21
2,068
176,625
316,824
Surplus/(deficit) from underwriting activities after
adjustment to claims liability
112,272
(73,665)
(125,885)
Net investment income
156,362
79,754
178,149
Other income
323
294
366
Net surplus
268,957
6,383
52,630
Account reserve – opening balance
180,766
180,766
128,136
Net surplus
268,957
6,383
52,630
Account reserve – closing balance
449,723
187,149
180,766
* Higher earnings base from earners resulted in an increase in income in this Account. However included in last year was an earners’ levy ‘square-up’ for
previous tax years with Inland Revenue resulting in additional income of $89.9 million for that year.
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
statement of fi
nancial performance and movements in account reserves (equity)
for the year ended 30 june 2004
parent
parent
parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
financial st
self-employed work account
Net levy income
Levy income*
96,531
125,089
122,491
a
tements
Total net levy income
96,531
125,089
122,491
expenditure
Rehabilitation
expenditure
105
Vocational rehabilitation
1,710
1,174
958
Social rehabilitation
4,948
5,051
4,073
Medical treatment
10,542
10,714
9,947
Hospital treatment
5,613
4,827
5,623
Public health acute services
5,379
6,047
5,317
Dental treatment
253
237
245
Conveyance for treatment
948
1,094
1,155
Miscellaneous claim costs
76
80
55
29,469
29,224
27,373
Compensation
expenditure
Income maintenance**
30,441
31,211
28,064
Independence allowances
340
454
185
Lump sums
468
1,059
8
Death benefits
1,978
1,987
1,303
33,227
34,711
29,560
Operating costs
4
11,131
12,431
10,506
Injury prevention costs
1,873
1,918
1,650
Collection costs
6,518
4,895
6,094
Total expenditure
82,218
83,179
75,183
Operating surplus before adjustment to claims liability
14,313
41,910
47,308
Adjustment to claims liability
21
16,299
53,310
51,229
Surplus/(deficit) from underwriting activities after
adjustment to claims liability
(1,986)
(11,400)
(3,921)
Net investment income
17,834
6,363
8,434
Other income
159
56
145
Net surplus/(deficit)
16,007
(4,981)
4,658
Account reserve – opening balance (deficit)
(1,137)
(1,137)
(5,795)
Net surplus/(deficit)
16,007
(4,981)
4,658
Account reserve – closing balance (deficit)
14,870
(6,118)
(1,137)
* Lower income this year is due to lower earnings base from self-employed on which levies are charged and lower than expected average levy rate being achieved.
** Includes payments of $3.5 million (2003 – $4.0 million) to persons who have purchased weekly compensation under CoverPlus Extra policies, of which
$3.5 million (2003 – $2.8 million) relates to work-related injuries and $nil (2003 – $1.2 million) to non-work injuries. Non-work injuries payment of $2.0 million
this year was paid from the Earners’ and Motor Vehicle Accounts. 12,562 (2003 – 9,968) CoverPlus Extra policies were purchased during the year.
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
statement of fi
nancial performance and movements in account reserves (equity)
for the year ended 30 june 2004
parent
parent
parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
employers’ account
tements
Net levy income
a
Levy income*
460,202
403,661
424,038
Total net levy income
460,202
403,661
424,038
expenditure
financial st
Rehabilitation
expenditure
106
Vocational rehabilitation
9,339
5,914
5,029
Social rehabilitation
14,319
16,342
13,290
Medical treatment
37,223
34,198
31,205
Hospital treatment
14,596
13,617
13,742
Public health acute services
17,615
18,809
17,525
Dental treatment
437
436
373
Conveyance for treatment
2,907
2,919
2,940
Miscellaneous claim costs
359
1,928
2,132
96,795
94,163
86,236
Compensation
expenditure
Income maintenance
106,495
104,716
87,944
Independence allowances
1,503
1,075
617
Lump sums
1,228
4,297
77
Death benefits
3,820
3,796
2,721
113,046
113,884
91,359
Operating costs
4
41,249
43,169
34,006
Injury prevention
9,577
10,564
4,810
Collection costs
10,933
7,706
8,164
Total expenditure
271,600
269,486
224,575
Operating surplus before adjustment to claims liability
188,602
134,175
199,463
Adjustment to claims liability
21
60,343
221,092
243,452
Surplus/(deficit) from underwriting activities after
adjustment to claims liability
128,259
(86,917)
(43,989)
Net investment income
80,372
31,625
37,064
Other income
208
178
200
Net surplus/(deficit)
208,839
(55,114)
(6,725)
Account reserve – opening balance
108,379
108,379
115,071
Net surplus/(deficit)
208,839
(55,114)
(6,725)
Amalgamation of the Non-Compliers Fund
23
-
-
33
Account reserve – closing balance
317,218
53,265
108,379
* Income is higher this year due to higher wage base on which levies are charged compared to last year and budget.
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
statement of fi
nancial performance and movements in account reserves (equity)
for the year ended 30 june 2004
parent
parent
parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
financial st
medical misadventure account
Net levy income
Levy income funded by:
a
tements
Non-Earners’ Account
31,293
31,043
48,032
Earners’ Account
38,247
37,941
58,706
Total net levy income
69,540
68,984
106,738
expenditure
107
Rehabilitation
expenditure
Vocational rehabilitation
346
180
196
Social rehabilitation
9,779
9,157
8,797
Medical treatment
1,787
1,753
1,410
Hospital treatment
773
962
894
Public health acute services
914
996
939
Dental treatment
36
30
28
Conveyance for treatment
196
203
213
Backdated attendant care
7
(155)
-
155
Miscellaneous claim costs
1,421
1,117
1,091
15,097
14,398
13,723
Compensation
expenditure
Income maintenance
12,640
11,524
9,702
Independence allowances
3,931
3,250
1,732
Lump sums
1,070
2,451
68
Death benefits
1,655
1,671
2,045
19,296
18,896
13,547
Operating costs
4
4,809
4,520
4,051
Injury prevention costs
-
33
24
Total expenditure
39,202
37,847
31,345
Operating surplus before adjustment to claims liability
30,338
31,137
75,393
Adjustment to claims liability
21
82,709
29,042
81,616
Surplus/(deficit) from underwriting activities after
adjustment to claims liability
(52,371)
2,095
(6,223)
Net investment income
21,166
9,496
11,665
Other income
1
13
2
Net surplus/(deficit)
(31,204)
11,604
5,444
Account reserve – opening balance (deficit)
(197,735) (197,735) (203,179)
Net surplus/(deficit)
(31,204)
11,604
5,444
Account reserve – closing balance (deficit)
(228,939)
(186,131)
(197,735)
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
group statement of fi
nancial position
as at 30 june 2004
group group group
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
Account reserves
Residual Claims Account
(1,413,250)
(1,357,673)
(1,443,107)
tements
a
Motor Vehicle Account
(1,556,934)
(1,628,717)
(1,776,549)
Non-Earners’ Account
(958,203)
(1,133,585)
(1,122,207)
Earners’ Account
449,723
187,149
180,766
Self-Employed Work Account
14,870
(6,118)
(1,137)
financial st
Employers’ Account
317,218
53,265
108,379
108
Medical Misadventure Account
(228,939)
(186,131)
(197,735)
Total Account reserves
(3,375,515)
(4,071,810)
(4,251,590)
Subsidiaries reserves
(474)
(793)
(319)
Revaluation reserve
12&19
948
44
44
Total reserves (deficit)
(3,375,041)
(4,072,559)
(4,251,865)
Represented
by:
Assets
Bank balances
16,279
23,958
24,432
Receivables
13
667,368
267,544
627,350
Accrued levy income
8
266,926
302,886
283,525
Deferred tax
6
166
338
150
Investments
9
6,175,958
5,941,376
4,922,780
Property, plant and equipment
12
101,247
100,059
88,208
Total assets
7,227,944
6,636,161
5,946,445
Less liabilities
Levy received in advance
11
346,176
314,638
313,478
Payables and accrued liabilities
7&14
909,617
732,088
730,025
Claims liability
21
9,347,192
9,661,994
9,154,807
Total liabilities
10,602,985
10,708,720
10,198,310
Net liabilities
(3,375,041)
(4,072,559)
(4,251,865)
For and on behalf of the Board, which authorised the issue of these fi nancial statements on 5 August 2004:
David
Caygill
Garry
Wilson
Chairman
Chief
Executive
Date: 5 August 2004
Date: 5 August 2004
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
parent statement of fi
nancial position
as at 30 june 2004
parent parent parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
financial st
Account
reserves
Residual Claims Account
(1,413,250)
(1,357,673)
(1,443,107)
Motor Vehicle Account
(1,556,934)
(1,628,717)
(1,776,549)
a
Non-Earners’ Account
(958,203)
(1,133,585)
(1,122,207)
tements
Earners’ Account
449,723
187,149
180,766
Self-Employed Work Account
14,870
(6,118)
(1,137)
Employers’ Account
317,218
53,265
108,379
Medical Misadventure Account
(228,939)
(186,131)
(197,735)
109
Total Account reserves
(3,375,515)
(4,071,810)
(4,251,590)
Revaluation reserve
12&19
948
44
44
Total reserves (deficit)
(3,374,567) (4,071,766) (4,251,546)
Represented
by:
Assets
Bank balances
16,051
24,583
24,444
Receivables
13
667,516
266,405
627,145
Accrued levy income
8
266,926
302,886
283,525
Investments
9
6,175,958
5,941,376
4,922,780
Investment in subsidiaries
10
1,450
1,100
1,100
Property, plant and equipment
12
100,797
99,101
87,327
Total assets
7,228,698
6,635,451
5,946,321
Less
liabilities
Levy received in advance
11
346,176
314,638
313,478
Payables and accrued liabilities
7&14
909,897
730,585
729,582
Claims liability
21
9,347,192
9,661,994
9,154,807
Total liabilities
10,603,265
10,707,217
10,197,867
Net liabilities
(3,374,567) (4,071,766) (4,251,546)
For and on behalf of the Board, which authorised the issue of these fi nancial statements on 5 August 2004:
David
Caygill
Garry
Wilson
Chairman
Chief
Executive
Date: 5 August 2004
Date: 5 August 2004
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
group statement of cash fl
ows
for the year ended 30 june 2004
group group group
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
Cash fl ows from operating activities
Cash was provided from:
tements
a
Levy income
2,704,412
3,077,376
2,381,597
Interest
167,219
123,057
141,267
Dividends
53,388
50,000
36,840
Goods and services tax (net)
-
-
49,671
financial st
Taxation received
135
-
-
110
Other income
2,012
2,562
2,042
2,927,166
3,252,995
2,611,417
Cash was applied to:
Payments to injured persons, suppliers and employees
2,048,659
1,705,652
2,028,077
Goods and services tax (net)
15,815
58,286
-
Taxation paid
-
89
105
2,064,474
1,764,027
2,028,182
Net cash movement from operating activities
22
862,692
1,488,968
583,235
Cash fl ows from investing activities
Cash was provided from:
Proceeds from sale of investments
12,583,142
12,000,000
9,241,314
Proceeds from sale of property, plant and equipment
204
-
3,468
12,583,346
12,000,000
9,244,782
Cash was applied to:
Purchase of investments
13,412,508
13,448,347
9,792,962
Purchase of property, plant and equipment
41,683
41,095
25,495
13,454,191
13,489,442
9,818,457
Net cash movement from investing activities
(870,845)
(1,489,442)
(573,675)
Cash fl ows from fi nancing activities
Net cash movement from financing activities
-
-
-
Net increase/(decrease) in cash held
(8,153)
(474)
9,560
Bank balance – opening balance
24,432
24,432
14,872
Bank balance – closing balance
16,279
23,958
24,432
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
parent statement of cash fl
ows
for the year ended 30 june 2004
parent parent parent
actual
budget
actual
2004 2004 2003
notes
$000 $000 $000
financial st
Cash fl ows from operating activities
Cash was provided from:
Levy income
2,704,412
3,077,376
2,381,597
a
Interest
167,219
123,057
141,267
tements
Dividends
53,388
50,000
36,840
Goods and services tax (net)
-
-
49,665
Other income
997
887
1,059
2,926,016
3,251,320
2,610,428
111
Cash was applied to:
Payments to injured persons, suppliers and employees
2,047,239
1,703,745
2,027,465
Goods and services tax (net)
15,840
58,267
-
2,063,079
1,762,012
2,027,465
Net cash movement from operating activities 22
862,937
1,489,308
582,963
Cash fl ows from investing activities
Cash was provided from:
Proceeds from sale of investments
12,583,142
12,000,000
9,241,314
Proceeds from sale of property, plant and equipment
188
-
3,468
12,583,330
12,000,000
9,244,782
Cash was applied to:
Purchase of investments
13,412,508
13,448,347
9,792,962
Investment in subsidiaries
350
-
-
Purchase of property, plant and equipment
41,802
40,822
25,212
13,454,660
13,489,169
9,818,174
Net cash movement from investing activities
(871,330)
(1,489,169)
(573,392)
Cash fl ows from fi
nancing
activities
Net cash movement from financing activities
-
-
-
Net increase/(decrease) in cash held
(8,393)
139
9,571
Bank balance – opening balance
24,444
24,444
14,873
Bank balance (overdraft) – closing balance
16,051
24,583
24,444
The above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
statement of commitments
as at 30 june 2004
group group parent parent
actual actual actual actual
2004 2003 2004 2003
$000 $000 $000 $000
financial st
Capital commitments approved and contracted
5,217
742
5,217
742
Non-cancellable operating lease commitments payable
tements
a
Not later than one year
8,444
9,151
8,020
8,319
a
tements
Later than one year but not greater than two years
8,056
6,998
7,632
6,436
Later than two years but not greater than five years
22,435
10,026
21,406
9,886
financial st
Later than five years
24,418
3,768
24,195
3,768
Total non-cancellable operating lease commitments payable
63,353
29,943
61,253
28,409
112
Total commitments
68,570
30,685
66,470
29,151
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.
statement of contingent liabilities
as at 30 june 2004
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:
group group parent parent
actual actual actual actual
2004 2003 2004 2003
$000 $000 $000 $000
Legal proceedings
3,644
5,222
3,644
5,222
In addition to the above litigation and claims, there may be additional litigation in progress of which ACC has not yet been advised,
mainly 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 above statement is to be read in conjunction with the accounting policies on pages 93 to 96 and notes on pages 113 to 127.
notes to the fi
nancial statements
for the year ended 30 june 2004
1. Net Levy Income
group and parent
2004 2003
$000 $000
financial st
Net levy income consists of the following:
Levy income
2,640,547
2,583,224
Add/(less):
a
tements
Decrease in provision for refund to early/later scheme employers
4,978
5,928
Reinsurance expense (refer to note 20 also)
-
(525)
Levy debts written off
(14,929)
(7,016)
(Increase)/decrease in the provision for doubtful debts for levy debtors
23,864
(7,335)
113
Net levy income
2,654,460
2,574,276
2. Net Investment Income
group and parent
2004 2003
$000 $000
Net investment income consists of the following:
Dividends received
68,043
46,563
Interest received
182,920
154,036
Net realised and unrealised gains
246,329
244,355
Total investment income
497,292
444,954
Less:
Investment expense
(7,867)
(7,929)
Net investment income
489,425
437,025
Included in net realised and unrealised gains are foreign exchange gains of $56.3 million (2003 – $88.5 million).
3. Total Operating Revenue
group group parent parent
2004 2003 2004 2003
$000
$000 $000 $000
Levy
income
2,640,547
2,583,224 2,640,547 2,583,224
Investment income
497,292
444,954
497,292
444,954
Other income
2,012
2,042
997
1,059
Total operating revenue 3,139,851
3,030,220
3,138,836
3,029,237
notes to the fi
nancial statements
for the year ended 30 june 2004
4. Operating Costs
group group parent parent
2004 2003 2004 2003
$000 $000 $000 $000
Operating costs include:
tements
External audit fees
265
214
265
214
a
Fees paid to external auditor for other services
88
74
88
74
Directors’ fees
330
303
266
270
Rental of office premises
9,090
7,594
9,078
7,594
financial st
Depreciation:
– Buildings
142
138
142
138
114
– Freehold improvements
387
378
387
378
– Leasehold improvements
2,338
2,282
2,295
2,193
– Furniture, fittings and equipment
2,062
2,225
2,000
2,098
– Computer equipment
19,664
16,273
19,527
16,044
– Motor vehicles
492
459
490
443
Property, plant and equipment write-offs/(reversal):
– Computer equipment
83
(73)
83
(73)
Operating lease equipment rentals
24
47
14
24
Bad debts written off
3
-
-
-
Change in provision for doubtful debts
1
-
-
-
Personnel expenditure
110,601
106,017
105,786
97,769
Supplies and services
73,919
63,017
77,835
70,494
219,489
198,948
218,256
197,660
Restructuring costs
9
566
-
566
Operating costs
219,498
199,514
218,256
198,226
Operating costs are allocated to:*
Residual Claims Account
33,392
34,093
Motor Vehicle Account
27,281
25,572
Non-Earners’ Account
26,844
24,383
Earners’ Account
73,550
65,615
Self-Employed Work Account
11,131
10,506
Employers’ Account
41,249
34,006
Medical Misadventure Account
4,809
4,051
Operating costs
218,256
198,226
External audit fees of the parent include audit work undertaken for the subsidiaries for this year.
Personnel expenditure includes salaries, superannuation, ACC levies paid and holiday pay accrued.
* Costs were allocated to Accounts for 2004 using a similar activity-based costing methodology as used for 2003.
notes to the fi
nancial statements
for the year ended 30 june 2004
5. Income Tax (Credit)/Expense
group
group
2004 2003
$000 $000
financial st
Surplus/(deficit) before tax
875,848
(615,584)
Add/(less) permanent differences:
Parent net (surplus)/deficit
(876,075)
615,279
a
tements
Non-deductible expenses
6
-
Accounting surplus/(deficit) subject to tax
(221)
(305)
Income tax at 33%
(73)
(101)
115
(Over)/under provision prior years
1
-
Income tax (credit)/expense
(72)
(101)
The income tax (credit)/expense is represented by:
Current tax
(56)
(124)
Deferred tax liability
(16)
23
(72)
(101)
6. Deferred Taxation (Asset)/Liability
group
group
2004 2003
$000 $000
Balance at beginning of the year
(150)
(173)
Transfer to Statement of Financial Performance
(16)
23
Balance at end of the year
(166)
(150)
7. Provisions
a) Backdated Attendant Care
group and parent
2004 2003
$000 $000
Opening balance
19,638
24,709
Paid out during the year
(6,733)
(5,399)
Additional provision made during the year
-
328
Unused provision reversed during the year
(2,162)
-
Closing balance
10,743
19,638
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. Most of this liability is expected to be incurred over the next 12 months.
notes to the fi
nancial statements
for the year ended 30 june 2004
b) Refund for Early/Later Scheme Employers
group and parent
2004 2003
$000 $000
Opening balance
7,900
14,734
tements
Paid out during the year
(2,265)
(906)
a
Unused provision reversed during the year
(4,978)
(5,928)
Closing balance
657
7,900
financial st
As a result of concerns raised at ministerial level by a number of employers and self-employed persons particularly Federated Farmers,
116
ACC reviewed the way it was applying the ‘clean slate’ transitional provisions of the Accident Insurance Act 1998 in relation to employers
and self-employed levy liability at the cut-off date for the private insurer work injury regime. A provision has been made for levy refunds
to certain employers and self-employed persons that are considered to have paid twice for the same period of work injury cover. This
liability is expected to be incurred over the next 12 months.
c) Interest on Late Payment of Weekly Compensation
group and parent
2004 2003
$000 $000
Opening balance
59
4,810
Paid out during the year
(59)
(159)
Unused provision reversed during the year
-
(4,592)
Closing balance
-
59
A liability for interest on late payments of weekly compensation for periods prior to 1 July 1992 arose from a decision of the High Court
in 2002. The Court found that there should be no differentiation between periods pre and post 1 July 1992 for payment of interest on late
payments of weekly compensation under the 1992 legislation.
8. 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 2004 in the following Accounts:
group and parent
2004 2003
$000 $000
Residual Claims Account
173,993
165,835
Earners’ Account
66,822
73,131
Employers’ Account
-
2,302
Self-Employed Work Account
26,111
42,257
266,926 283,525
notes to the fi
nancial statements
for the year ended 30 june 2004
9. Investments
ACC holds investments to meet the liquidity and reserve requirements of each Account as follows:
group and parent
financial st
2004 2003
$000 $000
New Zealand deposits at call
806,395
589,377
New Zealand government securities
1,899,574
1,519,242
a
tements
New Zealand equities
915,305
719,162
Australian equities
503,634
516,180
Australian deposits at call
22,260
19,062
New Zealand discounted securities
409,309
383,067
117
Other New Zealand fixed interest securities
588,226
370,180
Overseas fixed interest securities
141,074
147,431
Other overseas equities
890,181
659,079
6,175,958
4,922,780
Included within the above investment asset classes are $16.4 million (2003 – $4.0 million) of New Zealand equities and $680.0 million
(2003 – $504.7 million) of New Zealand government securities investments which are subject to fully collateralised security lending
transactions. Collateral received in these transactions is held as an asset, and the liability to repurchase the investments is accrued in
unsettled investment transactions.
At balance date, ACC has made conditional agreement to commit to invest $24.1 million (2003 – $26.6 million) in private equity
arrangements.
10. Investment In Subsidiaries
parent
parent
2004 2003 balance
$000 $000 date
Catalyst Risk Management Limited
600
250
30 June
Dispute Resolution Services Limited
850
850
30 June
1,450
1,100
Catalyst Risk Management Limited (formerly known as Catalyst Injury Management Limited) is an injury management company
providing recovery and rehabilitation management services.
Dispute Resolution Services Limited is a company providing accident insurance review and disputes services.
These companies are wholly owned subsidiaries of ACC.
notes to the fi
nancial statements
for the year ended 30 june 2004
11. Levy Received In Advance
group and parent
2004 2003
$000 $000
Motor Vehicle Account
161,336
148,502
tements
Earners’ Account
7,751
4,689
a
Employers’
Account
161,964 150,815
Self-Employed Work Account
15,125
9,472
346,176 313,478
financial st
118
Motor Vehicle Account levy and residual levy from motor vehicle relicensing are for a period of one month to one year in advance.
12. Proper ty, Plant And Equipment
group group parent parent
2004 2003 2004 2003
$000 $000 $000 $000
Freehold land at valuation
1,915
1,011
1,915
1,011
Buildings at valuation
6,628
6,377
6,628
6,377
Accumulated
depreciation
(980) (839) (980) (839)
5,648
5,538
5,648
5,538
Freehold improvements at valuation
3,913
3,151
3,913
3,151
Accumulated
depreciation
(1,759) (1,347) (1,758) (1,347)
2,154
1,804
2,155
1,804
Leasehold improvements at cost
21,751
16,865
21,386
16,483
Accumulated
depreciation
(9,555) (7,931) (9,287) (7,705)
12,196
8,934
12,099
8,778
Furniture, fittings and equipment at cost
21,964
20,811
21,631
20,183
Accumulated
depreciation
(17,287) (15,434) (17,025) (15,087)
4,677
5,377
4,606
5,096
Computer equipment at cost
122,775
120,194
121,996
119,248
Accumulated depreciation
(82,971)
(69,188)
(82,471)
(68,649)
39,804
51,006
39,525
50,599
Motor vehicles at cost
4,185
4,029
4,150
3,907
Accumulated
depreciation
(1,797) (1,437) (1,766) (1,352)
2,388
2,592
2,384
2,555
Work in progress at cost
Computer equipment
32,465
11,946
32,465
11,946
101,247
88,208
100,797
87,327
Note
The principal freehold land and building, including freehold improvements, are recorded at their 30 June 2004 valuation. ACC holds the
premises as a capital asset for long-term ownership, not as an investment property. The market valuation completed in June 2004 is
$9.5 million ($8.6 million in June 2003). The valuations were completed by CB Richard Ellis Limited, an independent registered public
valuer. The investment value approach was used as the basis of the valuation.
notes to the fi
nancial statements
for the year ended 30 june 2004
13. Receivables
group
group
parent
parent
2004 2003 2004 2003
$000 $000 $000 $000
financial st
Residual claims debtors (note i)
2,925
16,204
2,925
16,204
Less provision for doubtful debts
(2,925)
(16,107)
(2,925)
(16,107)
-
97
-
97
a
tements
Self-employed debtors (note i)
75,411
85,296
75,411
85,296
Less provision for doubtful debts
(24,466)
(34,116)
(24,466)
(34,116)
50,945
51,180
50,945
51,180
119
Employers debtors (note i)
480,830
482,637
480,830
482,637
Less provision for doubtful debts
(29,065)
(30,096)
(29,065)
(30,096)
451,765
452,541
451,765
452,541
Experience rating debtors
95
100
95
100
Less provision for doubtful debts
(95)
(99)
(95)
(99)
-
1
-
1
Claimant debtors (note ii)
14,012
13,657
14,012
13,657
Less provision for doubtful debts
(13,503)
(13,527)
(13,503)
(13,527)
509
130
509
130
PAYE receivable (note iii)
3,161
1,813
3,161
1,813
Less provision for doubtful debts
(430)
(429)
(430)
(429)
2,731
1,384
2,731
1,384
Motor vehicle levy receivable (note iv)
52,529
38,564
52,529
38,564
Non-Earners’ appropriation
-
26,868
-
26,868
Unsettled investment transactions
104,390
51,921
104,390
51,921
Prepayments
2,722
2,872
2,722
2,868
Tax refund due
257
237
-
-
Intercompany receivables
-
-
616
197
Advances to subsidiaries
-
-
204
978
Sundry debtors
1,520
1,555
1,105
416
667,368
627,350
667,516
627,145
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 LTSA from motor licensing due to ACC on the 1st of the following
month and the amount collected by NZ Customs for the ACC levy portion of the excise duty on petrol.
In addition to the above there are levies outstanding from employers, earners and motor vehicle owners. Inland Revenue, in its
capacity as collecting agent for ACC from employers and earners, estimates these to be approximately $nil as at 30 June 2004
(2003 – $34.0 million). The Land Transport Safety Authority, in its capacity as collecting agent for ACC from motor vehicle owners,
estimates this to be approximately $27.9 million (2003 – $14.9 million). As ACC is not able to determine the collectability of these
levies no accrual has been made.
notes to the fi
nancial statements
for the year ended 30 june 2004
14. Payables and Accrued Liabilities
group
group
parent
parent
2004 2003 2004 2003
$000 $000 $000 $000
Unsettled investment transactions
742,706
543,110
742,706
543,110
tements
PAYE and earnings-related deductions
8,807
7,252
8,797
7,203
a
Claims expenditure accrued and payable
25,704
25,639
25,704
25,639
Occupational safety and health
15,253
12,643
15,253
12,643
Sundry
creditors
1,036 485 987 480
financial st
Levies overpaid by Inland Revenue
6,000
12,000
6,000
12,000
Intercompany payables
-
-
547
445
120
Goods and services tax
42,471
58,286
42,427
58,267
Experience rating creditors
1,615
1,730
1,615
1,730
Accrued employee entitlements
6,581
9,721
6,343
9,146
Other accrued expenditure
37,733
31,562
37,550
31,270
Advances from subsidiaries
-
-
356
52
Non-Earners’ appropriation
10,212
-
10,212
-
Provision for backdated attendant care (refer to note 7a)
10,743
19,638
10,743
19,638
Provision for interest on late payment of weekly
compensation (refer to note 7c)
-
59
-
59
Provision for income tax
99
-
-
-
Provision for refund to early/later scheme
employers (refer to note 7b)
657
7,900
657
7,900
909,617
730,025
909,897
729,582
15. Financial Instruments
a) Interest Rate Management
ACC invests its funds through 11 investment portfolios which at 30 June 2004 comprise a cash portfolio of $229.0 million (2003
– $382.8 million) and 10 reserves portfolios totalling $5,308.6 million (2003 – $4,048.7 million). The cash portfolio is used to meet
liquidity requirements. The reserves portfolios’ principal assets are bonds and equities. The interest rate exposures of the reserves and
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.
There were no interest rate swaps held at 30 June 2004 or 2003.
The weighted average effective interest rates for all classes of investments are as follows:
2004
2003
% %
New Zealand deposits at call
5.75
5.25
New Zealand government securities
6.16
5.25
New Zealand discounted securities
6.08
5.27
Other New Zealand fixed interest securities
6.97
5.83
Overseas fixed interest securities
4.64
3.32
notes to the fi
nancial statements
for the year ended 30 june 2004
b) Currency Risk Management
Part of the reserves portfolio is invested in overseas fi xed interest and equity markets, which total $1,557.1 million as at 30 June 2004
(2003 – $1,341.8 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 measures
financial st
foreign currency exposure of each reserves portfolio. The Investment Committee has set out investment guidelines on the treatment of
currency risk. During the year, an average of 61% of the overseas currency exposure was hedged to New Zealand dollars.
The notional principal or contract amounts outstanding at 30 June are as follows:
a
tements
group and parent
2004 2003
$000 $000
Forward exchange contracts
728,698
946,715
121
The estimated cash settlement infl ow required for these instruments, based on market valuations at 30 June, is:
group and parent
2004 2003
$000 $000
Forward exchange contracts
2,550
1,255
c) Repricing Analysis
The following table identifi es the products in which fi nancial instruments that are subject to interest rate risk reprice. The effective
interest rate incorporates the effect of the relevant derivative contracts.
greater
effective
less than
between
than 5
interest
total
1 year
1-2 years
2-5 years years
rate $000 $000 $000 $000 $000
2004 Group and Parent
Assets
Investments
New Zealand government securities
6.16% 1,899,574
-
-
- 1,899,574
New Zealand deposits at call
5.75%
806,395
806,395
-
-
-
New Zealand discounted securities
6.08%
409,309
409,309
-
-
-
Other New Zealand fixed interest securities
6.97%
588,226
15,325
2,564
172,360
397,977
Overseas fixed interest securities
4.64%
141,074
112,077
3,957
4,376
20,664
3,844,578
1,343,106
6,521
176,736
2,318,215
2003 Group and Parent
Assets
Investments
New Zealand government securities
5.25% 1,519,242
520
-
- 1,518,722
New Zealand deposits at call
5.25%
589,377
589,377
-
-
-
New Zealand discounted securities
5.27%
383,067
383,067
-
-
-
Other New Zealand fixed interest securities
5.83%
370,180
127,196
22,005
109,277
111,702
Overseas fixed interest securities
3.32%
147,431
90,825
4,933
7,501
44,172
3,009,297
1,190,985 26,938 116,778
1,674,596
notes to the fi
nancial statements
for the year ended 30 june 2004
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 which 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 Standard and Poors. Credit risk exposure is monitored on a continuous basis and ACC does not anticipate
non-performance by the counterparties.
tements
Signifi cant concentrations of credit risk are held in the following:
a
group
group
parent
parent
2004 2003 2004 2003
$000 $000 $000 $000
financial st
1. Bank balances
16,279
24,432
16,051
24,444
122
2. Receivables
721,155
677,542
721,625
678,212
3. New Zealand government securities
1,899,574
1,519,242
1,899,574
1,519,242
4. Major New Zealand financial institutions in call deposits,
negotiable certificates of deposits and bonds maturing:
– in less than three months
890,993
786,246
890,993
786,246
– in more than three months
108,102
16,531
108,102
16,531
The highest amount with one institution is $290.5 million (2003 – $209.8 million).
All investments are marked to market; fair value is equal to carrying value.
e) Equity Market Derivatives
There were no equity market derivatives held at 30 June 2004 or 2003.
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 are equivalent to their fair value.
Investments
The fair value of the investments are equivalent to their carrying value.
16. Credit Rating
In terms of the Insurance Companies (Ratings and Inspection) Act 1994, ACC undergoes a fi nancial strength rating. The rating review is
performed annually by A M Best Company, Inc. As at the date of this report the rating assigned to ACC was ‘A+ (Superior)’. This rating
represents ‘very strong’ fi nancial security.
17. Segmental Repor ting
ACC operates in New Zealand and predominantly in one industry, that being insurance-based accident rehabilitation and compensation.
notes to the fi
nancial statements
for the year ended 30 june 2004
18. Related Par ty 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.
financial st
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 $6.9 million (2003 – $11.4 million). The amount outstanding
at balance date was $0.5 million (2003 – $0.4 million). Sales to the group companies by ACC for its services totalled $1.3 million
(2003 – $1.5 million). The amount outstanding at balance date was $0.6 million (2003 – $0.2 million).
a
tements
ACC provided additional advances to its group companies during the year. The amount outstanding at balance date was $0.4 million
(2003 – $0.9 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.
123
19. Asset Revaluation Reser ve
group and parent
2004 2003
$000 $000
Balance at the beginning of the year
44
44
Revaluation increase
904
-
Balance at the end of the year
948
44
Comprising:
Land
948
-
Buildings
-
44
948
44
20. Reinsurance
ACC has no catastrophe reinsurance as the cost to fully replace the cover would not be in line with the risk. Catastrophe reinsurance will
be reconsidered if and when this can be achieved at a reasonable cost.
21. 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.
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 Chris Latham,
has been made of the future expenditure relating to injuries which occurred prior to balance date, whether or not the claims have been
reported to or accepted by Accident Compensation Corporation. Chris Latham is a Fellow of the Institute of Actuaries of Australia, Fellow
of the New Zealand Society of Actuaries and Fellow of the Institute of Actuaries (London).
The actuarial estimate has been made based on actual experience to 30 June 2004 for non-fatal income maintenance and actual
experience to 31 March 2004 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. They have used the
information without independent verifi cation, although they reviewed it where possible for reasonableness and consistency. 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.
notes to the fi
nancial statements
for the year ended 30 june 2004
The main long-term assumptions used in the above estimates for discounting to present values are:
2004 % pa
2003
year 1
years 2+
% pa
1. Interest rate for discounting (weighted average rate of government stock)
6.5%
6.5%
5.5%
2.
Inflation
rates:
– weekly compensation
2.2%
2.5%
2.3%
tements
a
– impairment benefits
1.6%
2.2%
2.1%
– rehabilitation and other benefits(a)
2.2% 2.5% 8.3%
– medical costs(b)
2.2%
2.5%
5.2%
financial st
3. Allowance for claims handling expenses (as a proportion of liabilities)
5.0% 5.0% 5.0%
124
(a) Social rehabilitation for serious injury claims (which represents around 50% of rehabilitation liability) has an allowance for
superimposed infl ation of 3.0% pa over the next three years. Non-serious injury social rehabilitation does not include an
allowance for superimposed infl ation (except for in the Residual Non-Work account which has a short-term allowance for
superimposed infl ation).
(b) Long-term medical cost infl ation (2004) now includes an explicit allowance for superimposed infl ation.
Claims Liability as at 30 June 2004 (Discounted)
medical
self-
30
june
residual
motor
non-
mis-
employed
30
june
2004
claims vehicle earners’ earners’
employers’
adventure
work
2003
total account account account account account account account
total
$million $million $million $million $million $million $million $million
$million
Rehabilitation
Medical treatment
466 110 68 106 116 38 17 11
344
Miscellaneous
3,908 656
1,322 964 454 195 260 57
3,910
4,374 766
1,390
1,070 570 233 277 68
4,254
Compensation
Income maintenance
3,956
1,430 965 93 821 400 133 114
4,048
Impairment benefits
541 60 106 216 92 28 32 7
389
4,497
1,490
1,071 309 913 428 165 121
4,437
Present value of
the claims liability 8,871 2,256 2,461 1,379 1,483
661 442 189 8,691
Present value of the
operating costs of
meeting these claims
443
113
123
69
73
33
23
9
435
Bulk billed costs
33
2
5
15
6
3
1
1
29
Total present value
of the claims liability
9,347 2,371 2,589 1,463 1,562 697 466 199 9,155
As at end of year
(Discounted)
9,155
2,450
2,488
1,477
1,560
614
383
183
7,501
Transfer from
Other Insurers
22
-
-
-
-
22
-
-
4
Movement during
the year 170
(79)
101
(14)
2
61
83
16
1,650
notes to the fi
nancial statements
for the year ended 30 june 2004
Maturity Profi le
As at 30 June 20041
medical
self-
30
june
residual
motor
non-
mis-
employed
30
june
financial st
2004
claims vehicle earners’ earners’
employers’
adventure
work 2003
total account account account account account account account total
$million $million $million $million $million $million $million $million
$million
Within
one
year 1,160 263 235 169 277 138 36 42
1,116
a
tements
Later than one year
but not later than
two
years
840 231 200 107 165 82 32 23
770
Later than two
years but not later
than
five
years
1,871 548 477 235 330 158 79 44
1,739
125
Later than five years
but not later than
ten
years
2,034 590 557 284 324 145 93 41
2,014
Later than ten years
3,442 739
1,120 668 466 174 226 49
3,516
Total present value
of the claims
liability
9,347 2,371 2,589 1,463 1,562 697 466 199
9,155
1 Includes claim handling expenses.
Analysis Of Changes
medical
self-
30
june
residual
motor
non-
mis-
employed
30
june
2004
claims vehicle earners’ earners’
employers’
adventure
work
2003
total account account account account account account account total
$million $million $million $million $million $million $million $million
$million
Opening gross
liability
17,499 4,008 5,133 3,435 2,813 985 834
291
15,225
Payments in respect
of prior years
(1,161) (304) (240) (168) (261) (115) (36) (37)
(1,076)
Change in prior
year
estimates*
4,709 910 1,722 1,247
111
(75) 804
(10)
1,467
Current year
claims**
2,204
- 532 385 621 424 118 124
1,883
Closing gross
liability
23,251 4,614 7,147 4,899 3,284 1,219 1,720 368
17,499
Discounted at 2003
interest
rate*** 10,309 2,571 2,897 1,658 1,694 743 533 213
8,218
Effect of change
in interest rates
(962)
(200)
(308)
(195)
(132)
(46)
(67)
(14)
937
Closing discounted
liability
9,347 2,371 2,589 1,463 1,562 697 466 199
9,155
*
Changes to the estimated value of future payments to refl ect the experience of the scheme in 2003-04 for accidents incurred prior to July 2003.
** Estimated value of future payments for injuries incurred between July 2003 and June 2004.
*** The actual 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.
notes to the fi
nancial statements
for the year ended 30 june 2004
22. Cash Flows
Reconciliation of net cash infl ow from operating activities with the reported net surplus/(defi cit)
group group group parent parent parent
actual budget actual actual budget actual
2004 2004 2003 2004 2004 2003
$000 $000 $000 $000 $000 $000
tements
a
Net surplus/(deficit) after taxation
875,920
179,306 (615,483)
876,075
179,780 (615,279)
Add/(less) items classified as investing activities
financial st
(Gain)/loss on sale of fixed assets
38
-
(243)
(12)
-
(243)
126
Realised (gains)/loss on sale of investments
8,522
(8,000)
(21,140)
8,522
(8,000)
(21,140)
Add/(less) non-cash items
Depreciation
25,085
29,244
21,755
24,841
29,048
21,294
Offshore income re-invested
(126,764) (30,000)
(81,271) (126,764) (30,000)
(81,271)
Increase/(decrease) in backdated
attendant care provision
(2,162)
-
328
(2,162)
-
328
Levy debts written off
14,929
-
7,016
14,929
-
7,016
(Decrease)/Increase in doubtful
debts for levy debtors
(23,864)
-
7,335
(23,864)
-
7,335
(Decrease) in provision for refund
to early/later scheme employers
(4,978)
-
(6,834)
(4,978)
-
(6,834)
(Decrease) in provision for interest
on late payment of weekly compensation
-
-
(4,751)
-
-
(4,751)
Property, plant and equipment writeoffs (reversal)
83
-
(73)
83
-
(73)
Movement in deferred tax
(16)
-
23
-
-
-
Adjustment to claims liability
169,903
507,186 1,650,519
169,903
507,186 1,650,519
Add/(less) movements in working capital items
In accounts receivable
29,376
311,393 (336,734)
29,023
312,515 (336,720)
In accounts payable and accrued liabilities
13,756
545,174
(65,220)
14,477
544,114
(65,226)
In levies received in advance
32,698
1,160
191,549
32,698
1,160
191,549
Add/(less)
net
adjustments
to
investments
for
market values and accrued income
(149,834) (46,495) (163,541) (149,834) (46,495) (163,541)
Net cash inflow/(outflow) from operating activities
862,692 1,488,968
583,235
862,937 1,489,308
582,963
notes to the fi
nancial statements
for the year ended 30 june 2004
23. Non-Compliers Fund
On 1 July 2002 the Accident Insurance Regulator’s role in relation to the Non-Compliers Fund was transferred to ACC pursuant to section
345 of the Act. The Statement of Financial Position was transferred to ACC, as follows:
financial st
$000
Reserves
33
Represented by:
a
Assets
tements
Bank balance
205
Receivables
11
216
Less liabilities
127
Claims liability
(183)
Net assets
33
24. Events After Balance Date
On 1 July 2004, a subsidiary of ACC, Catalyst Risk Management Limited (formerly known as Catalyst Injury Management Limited)
acquired the assets, relating to third party administration of ACC’s Partnership Programme, of CRM Group Limited for $2.75 million.
As part of the transaction, Catalyst Risk Management Limited has taken over the client contracts of CRM Group Limited and continues
to employ their injury management staff.
Assets acquired:
$000
Non-current assets
Copyright in technological systems
2,500
Intellectual property rights
25
20% Shareholding in Impac Limited, plus other minor assets
75
Net assets acquired
2,600
Cash paid
2,750
Goodwill arising on acquisition
150
Catalyst Risk Management Limited has also entered into an agreement to subscribe to the capital of AllCare Insurance Limited, a retail
insurer of absence minimisation products, in the amount of $1.0 million for a 45% shareholding. The settlement of this agreement is
awaiting the vendor to fulfi l certain requirements to the satisfaction of Catalyst Risk Management Limited.
statement of responsibility
(Pursuant to section 42 of the Public Finance Act 1989)
We acknowledge responsibility for the preparation of these fi nancial 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 fi nancial statements fairly refl ect the fi nancial position and operations of ACC for the year ended 30 June 2004.
tements
a
financial st
David
Caygill
Garry
Wilson
Chairman
Chief
Executive
128
Date: 5 August 2004
Date: 5 August 2004
report of the offi
ce of the auditor-general
for the year ended 30 june 2004
To the readers of the Financial Statements of the Accident Compensation Corporation and Group
The Auditor-General is the auditor of Accident Compensation Corporation and Group (the “Corporation”). The Auditor-General has appointed
me, B R Penrose, using the staff and resources of Ernst & Young, to carry out the audit of the fi nancial statements of the Corporation, on his
behalf, for the year ended 30 June 2004.
financial st
Unqualifi ed Opinion
In our opinion the fi nancial statements of the Corporation on pages 62 to 82 and 93 to 127:
• comply with generally accepted accounting practice in New Zealand; and
• fairly
refl ect:
a
–
the Corporation’s fi nancial position as at 30 June 2004;
tements
–
the results of its operations and cash fl ows for the year ended on that date; and
–
its service performance achievements measured against the performance targets adopted for the year ended on that date.
The audit was completed on 5 August 2004, and is the date at which our opinion is expressed.
The basis of the opinion is explained below. In addition, we outline the responsibilities of the Board and the Auditor, and explain our
independence.
129
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 our audit to obtain all the information and explanations we considered necessary in order to obtain reasonable
assurance that the fi nancial statements 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. If we had found material misstatements that were not corrected, we would have referred to them in the opinion.
Our audit involved performing procedures to test the information presented in the fi nancial statements. 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 disclosures are adequate.
We did not examine every transaction, nor do we guarantee complete accuracy of the fi nancial statements.
We evaluated the overall adequacy of the presentation of information in the fi nancial statements. We obtained all the information and
explanations we required to support the opinion above.
Responsibilities of the Board and the Auditor
The Board is responsible for preparing fi nancial statements in accordance with generally accepted accounting practice in New Zealand. Those
fi nancial statements must fairly refl ect the fi nancial position of the Corporation as at 30 June 2004. They must also fairly refl ect the results of
its operations and cash fl ows and service performance achievements for the year ended on that date. The Board’s responsibilities arise from
the Public Finance Act 1989 and the Injury Prevention, Rehabilitation and Compensation Act 2001.
We are responsible for expressing an independent opinion on the fi nancial statements and reporting that opinion to you. This responsibility
arises from section 15 of the Public Audit Act 2001 and section 43(1) of the Public Finance Act 1989.
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 marketing strategy investigation,
which are compatible with those independence requirements. Other than the audit and these assignments, we have no relationship with or
interests in the Corporation.
B R Penrose
Ernst & Young
On behalf of the Auditor-General
Wellington, New Zealand
remuneration of employees
for the year ended 30 june 2004
The number of employees whose income was within specifi ed bands is as follows:
group
2004 2003
financial st
$100,000 – $110,000
33
25
$110,000 – $120,000
17
20
$120,000 – $130,000
23
11
tements
a
$130,000 – $140,000
13
5
a
tements
$140,000 – $150,000
4
6
$150,000 – $160,000
4
5
$160,000 – $170,000
1
3
financial st
$170,000 – $180,000
8
4
130
$180,000 – $190,000
1
1
$190,000 – $200,000
1
2
$200,000 – $210,000
2
1
$210,000 – $220,000
1
-
$220,000 – $230,000
1
-
$230,000 – $240,000
-
-
$240,000 – $250,000
2
3
$250,000 – $260,000
-
-
$260,000 – $270,000
2
-
$270,000 – $280,000
-
-
$280,000 – $290,000
-
4
$290,000 – $300,000
2
1
$300,000 – $310,000
1
-
$310,000 – $320,000
2
-
$430,000 – $440,000
-
-
$450,000 – $460,000
-
-
$460,000 – $470,000
-
-
$470,000 – $480,000
-
-
$480,000 – $490,000
-
1
$490,000 – $500,000
1
-
119
92
Average income of above employees
$143,344
$143,284
comparative statement of fi
nancial performance (parent)
for the fi ve years ended 30 june 2004
2004 2003 2002 2001 2000
$000 $000 $000 $000 $000
Combined
Total income
3,144,882
3,012,360
2,455,020
2,195,261
1,903,813
financial st
Total expenditure
2,098,904
1,977,120
1,852,391
1,742,251
1,606,410
Adjustment to claims liability
169,903
1,650,519
359,474
765,642
(519,000)
Surplus/(deficit)
876,075
(615,279)
243,155
(312,632)
816,403
a
Opening
Account
reserves
(deficit)
(4,251,546) (3,636,300) (3,879,455) (3,566,280) (4,382,683)
tements
Amalgamation of the Non-Compliers Fund
-
33
-
-
-
Increase/(decrease) in revaluation reserve
904
-
-
(543)
-
Closing Account reserves (deficit)
(3,374,567)
(4,251,546)
(3,636,300)
(3,879,455)
(3,566,280)
131
Residual Claims Account
Total income
284,703
298,912
356,760
280,606
289,765
Total expenditure
333,381
350,675
394,025
472,589
552,423
Adjustment to claims liability
(78,535)
112,432
(201,364)
(95,125)
(824,000)
Surplus/(deficit)
29,857
(164,195)
164,099
(96,858)
561,342
Opening Account reserve (deficit)
(1,443,107)
(1,278,912)
(1,443,011)
(1,346,153)
(1,907,495)
Closing Account reserve (deficit)
(1,413,250)
(1,443,107)
(1,278,912)
(1,443,011)
(1,346,153)
Motor Vehicle Account
Total income
662,950
494,636
387,421
417,067
414,426
Total expenditure
342,694
334,242
312,591
297,435
283,712
Adjustment to claims liability
100,641
500,274
241,291
188,148
204,000
Surplus/(deficit) 219,615
(339,880)
(166,461)
(68,516)
(73,286)
Opening Account reserve (deficit)
(1,776,549)
(1,436,669)
(1,270,208)
(1,201,692)
(1,128,406)
Closing Account reserve (deficit)
(1,556,934)
(1,776,549)
(1,436,669)
(1,270,208)
(1,201,692)
Non-Earners’ Account
Total income
620,636
637,456
577,141
374,155
357,140
Total expenditure
470,254
459,975
418,045
363,985
343,227
Adjustment to claims liability
(13,622)
344,692
14,891
163,833
46,000
Surplus/(deficit)
164,004
(167,211)
144,205
(153,663)
(32,087)
Opening Account reserve (deficit)
(1,122,207)
(954,996)
(1,099,201)
(945,538)
(913,451)
Closing Account reserve (deficit)
(958,203)
(1,122,207)
(954,996)
(1,099,201)
(945,538)
This Account was established, with effect from 1 April 1992, by the Accident Rehabilitation and Compensation Insurance Act 1992.
comparative statement of fi
nancial performance (continued)
for the fi ve years ended 30 june 2004
2004
2003
2002
2001
2000
$000 $000 $000 $000 $000
Earners’ Account
Total income
830,580
870,579
617,486
575,112
708,868
financial st
Total expenditure
559,555
501,125
460,809
413,489
384,465
Adjustment to claims liability
2,068
316,824
96,068
156,581
(37,000)
tements
a
Surplus
268,957
52,630
60,609
5,042
361,403
a
tements
Opening Account reserve (deficit)
180,766
128,136
67,527
62,485
(298,918)
Closing Account reserve (deficit)
449,723
180,766
128,136
67,527
62,485
financial st
This Account was established, with effect from 1 April 1992, by the Accident Rehabilitation and Compensation Insurance Act 1992.
132
Self-Employed
Work
Account
Total income
114,524
131,070
91,625
81,187
90,115
Total expenditure
82,218
75,183
63,679
49,604
24,440
Adjustment to claims liability
16,299
51,229
43,653
47,346
40,000
Surplus/(deficit)
16,007
4,658
(15,707)
(15,763)
25,675
Opening Account reserve
(1,137)
(5,795)
9,912
25,675
-
Closing Account reserve
14,870
(1,137)
(5,795)
9,912
25,675
This Account was established, with effect from 1 July 1999, by the Accident Insurance Act 1998.
Employers’ Account
Total income
540,782
461,302
387,583
376,854
2,383
Total expenditure
271,600
224,575
173,755
117,101
5,077
Adjustment to claims liability
60,343
243,452
171,980
182,836
1,000
Surplus/(deficit)
208,839
(6,725)
41,848
76,917
(3,694)
Opening Account reserve (deficit)
108,379
115,071
73,223
(3,694)
-
Amalgamation of the Non-Compliers Fund
-
33
- - -
Closing Account reserve (deficit)
317,218
108,379
115,071
73,223
(3,694)
This Account was established, with effect from 1 April 2000, by the Accident Insurance Amendment Act 2000.
Medical Misadventure Account
Total income
90,707
118,405
37,004
90,280
41,116
Total expenditure
39,202
31,345
29,487
28,048
13,066
Adjustment to claims liability
82,709
81,616
(7,045)
122,023
51,000
Surplus/(deficit)
(31,204)
5,444
14,562
(59,791)
(22,950)
Opening Account reserve (deficit)
(197,735)
(203,179)
(217,741)
(157,950)
(135,000)
Closing Account reserve (deficit)
(228,939)
(197,735)
(203,179)
(217,741)
(157,950)
This Account was established, with effect from 1 April 1992, by the Accident Rehabilitation and Compensation Insurance Act 1992.
No expenditure was attributed to the Account until the year ended 30 June 1994.
comparative statement of fi
nancial position (parent)
as at 30 june
2004
2003
2002
2001
2000
$000 $000 $000 $000 $000
Account reserves
Residual Claims Account
(1,413,250)
(1,443,107)
(1,278,912)
(1,443,011)
(1,346,153)
financial st
Motor
Vehicle
Account
(1,556,934) (1,776,549) (1,436,669) (1,270,208) (1,201,692)
Non-Earners’ Account
(958,203)
(1,122,207)
(954,996)
(1,099,201)
(945,538)
Earners’ Account
449,723
180,766
128,136
67,527
62,485
a
Self-Employed Work Account
14,870
(1,137)
(5,795)
9,912
25,675
tements
Employers’ Account
317,218
108,379
115,071
73,223
(3,694)
Medical
Misadventure
Account
(228,939) (197,735) (203,179) (217,741) (157,950)
Total
Account
reserves
(3,375,515) (4,251,590) (3,636,344) (3,879,499) (3,566,867)
133
Revaluation reserve
948
44
44
44
587
Total reserves (deficit)
(3,374,567) (4,251,546) (3,636,300) (3,879,455) (3,566,280)
Represented
by:
Assets
Bank balances
16,051
24,444
14,873
12,361
26,354
Receivables
667,516
627,145
107,626
109,866
220,747
Accrued levy income
266,926
283,525
439,027
157,948
229,387
Investments
6,175,958
4,922,780
3,628,035
3,417,450
2,824,861
Investment in subsidiaries
1,450
1,100
1,100
1,100
1,100
Property, plant and equipment
100,797
87,327
91,330
82,191
67,005
Total assets
7,228,698
5,946,321
4,281,991
3,780,916
3,369,454
Less liabilities
Levy received in advance
346,176
313,478
121,929
89,915
83,842
Payables and accrued liabilities
909,897
729,582
295,746
429,314
458,560
Cash
advances
- - - -
29,332
Claims liability
9,347,192
9,154,807
7,500,616
7,141,142
6,364,000
Total liabilities
10,603,265
10,197,867
7,918,291
7,660,371
6,935,734
Net assets/(liabilities)
(3,374,567) (4,251,546) (3,636,300) (3,879,455) (3,566,280)
disclosure of the impact of adopting new zealand equivalents to international fi
nancial reporting standards
There is currently no fi nancial reporting standard in
Financial instruments
New Zealand covering the disclosure of information
ACC has reviewed the NZ IFRS on fi nancial instruments
in fi nancial reports before entities adopt New Zealand
and anticipates that there will be no signifi cant changes
equivalents to International Financial Reporting
to the accounting policies.
Standards (NZ IFRS). ACC has therefore provided the
following disclosure based on the accounting standard
Computer software
tements
(AASB 1047) issued by the Australian Accounting
a
ACC currently capitalises its internally generated
Standards Board in April 2004.
computer software as property, plant and equipment,
which is depreciated accordingly.
Managing the transition to NZ IFRS
financial st
Under NZ IFRS, ACC’s internally generated computer
The transition to NZ IFRS is under the control of the
software could be capitalised as an intangible asset,
134
Chief Financial Offi cer who will report to the Audit
provided it meets the recognition criteria. These assets
Committee on progress. A project team has been set up
will be subject to an annual impairment test (testing for
to manage this transition.
any change in the asset’s replacement cost).
The transition process will start with a diagnostic phase
Revaluation of property, plant and equipment
with the aim of providing a clear understanding of the
important issues ACC will encounter. The next phase
Asset valuation increments (increases) and decrements
will be to assess the impact of NZ IFRS identifying
(decreases) must be accounted on an individual basis,
rather than by class. This has the potential to result in
the systems, processes and internal control changes
revaluation expenses, as individual asset revaluation
necessary to gather all the required information.
movements can no longer be offset against other
Staff involved in preparing ACC’s fi nancial statements
revaluation movements within that class.
have started familiarising themselves with NZ IFRS
Income tax
and assessing the potential impact on the accounting
policies currently used.
A balance sheet approach will be adopted under which
temporary differences are identifi ed for each asset and
Key differences in accounting policies
liability rather than accounting for the effects of timing
and permanent differences between taxable income and
expected to arise from adopting NZ IFRS
accounting profi t.
Claims liability
No decision has yet been made on what changes will
be needed to the accounting policies that cover the
valuation of the claims liability. This is because recent
developments have raised some signifi cant issues for
ACC (refer to page 18).
16
gl
gl
o
o
ssar
ssar
g lo s s a ry a n d co n tac t n u m b e r s
y and c
y and c
ont
ont
a
a
This glossary is a guide only. Some of these terms are complex and have fuller defi nitions in our legislation.
ct numbers
ct numbers
Accident
An event that causes a person to be injured,
Graduated driver
The system for getting your driving licence in
or in different circumstances might have
licensing
New Zealand.
caused a person to be injured.
Health Research
The major Government funder of biomedical,
Age Concern
A not-for-profi t, charitable organisation,
Council
public health, health services, Mäori health
135
New Zealand
dedicated to promoting the quality of life
and Pacifi c health research in New Zealand.
and wellbeing of older people.
Healthwise
A division of ACC, responsible for purchasing
Baldrige principles Used internationally to measure and
and managing contracts for healthcare on
improve business performance based on
behalf of ACC.
what is commonly found in high-performing
Hui
A forum for discussion for Mäori.
companies.
Incapacity
A person is unable to return to work because
Benchmarking
To improve one’s own performance
of a personal injury.
by measuring it against competitors’
performance according to specifi ed
Impairment
A loss, or loss of use, of any body part or
standards.
organ function.
Capitalisation
A claimant being able to receive future
Individual
The key management and planning
payments as one, or a series of, lump sums.
rehabilitation plan document for case management. It collects
(IRP)
information, sets goals and establishes
Claimant
The injured person who receives
plans of action for treatment and for social
rehabilitation and compensation from ACC.
and vocational rehabilitation.
Drink-check tool
A questionnaire that screens for risky or
Independence
A weekly non-taxable allowance to help
binge drinking and provides options to help.
allowance
offset the additional costs associated with
Endorsed Provider The network is made up of providers
living with a disability or
impairment.
Network
who meet externally audited quality-
Liable earnings
Earnings that a self-employed person has
based standards. They include doctors,
made in a fi nancial year and declared on
physiotherapists and radiologists. A claimant
their end of year tax return. It is also the
who uses an endorsed provider won’t have
wages/salaries that an employer has paid
to contribute towards treatment costs.
out to their staff.
Entitlements
All the services ACC can provide to an injured
Lump sum
A one off, non-taxable payment to
person to assist their recovery.
compensation
compensate for permanent impairment
e-transactions
Payments or other transactions between ACC
resulting from an injury covering injuries
and our customers or partners that are done
occurring on or after 1 April 2002.
electronically.
Mental injury
A clinically signifi cant behavioural, cognitive
Family Start
An early intervention service aimed at
or psychological dysfunction.
helping New Zealand’s most at-risk families.
Plunket Society
The major provider of well child health
Fono
A forum for discussion for Pacifi c peoples.
services in New Zealand. Plunket’s role
(see
hui)
is to support the health and wellbeing of
families/whanau and young children.
Fully funded
Levies are set at a rate that not only covers
scheme
the cost of claims in the current year for
Rehabilitation
A series of interventions (for example,
persons injured in the current year, but also
physiotherapy) that aim to return the
covers the estimated total cost of claims
claimant as close as is practicable to their
which will be paid in future years for those
pre-injury state.
injuries.
Royal Commission The commission led by Sir Owen Woodhouse
ThinkSafe
Umbrella brand for ACC’s injury prevention
whose recommendations in 1967 led to ACC
initiatives, which include FarmSafe and
opening our doors seven years later.
RiverSafe.
Safe2Go
ACC’s programme for training parents in
Treatment
The management and care of a patient
gl
using car seats.
(including diagnosis) to combat disease or
o
ssar
disorder. It relates to fi rst aid, or medical,
Social
All the rehabilitation unrelated to the
surgical or dental care.
y and c
rehabilitation
claimant’s return to work, for example being
ct numbers
helped by a nurse, or childcare.
Treatment provider For example, a nurse, occupational therapist,
a
optometrist, physiotherapist, registered
ont
SportSmart
ACC’s 10-point action plan for preventing
ont
medical practitioner, or speech therapist.
sports injuries.
a
ct numbers
Vocationally
An injured person who has the ability
Stop Bus
ACC’s contract with the New Zealand Police
y and c
independent
following rehabilitation to get a job.
for compulsory breath testing and anti-drink-
ssar
driving advertising.
Vocational Medical They assess an injured claimant’s suitability
o
Assessors
to return to work, including alternate
gl
StoreSafe
Our health and safety passport for
employment if they are unable to return to
employers who visit grocery stores or
their old job.
136
supermarkets.
Vocational
ACC helps a claimant to maintain
Street Talk
A course that teaches drivers a programme
Rehabilitation
employment, obtain employment, or
to turn negative driving experiences
maintain or obtain vocational independence
(speeding, etc) into positive ones through
(able to get a job after an injury).
learning new safety skills.
The 5 Drivers
The key drivers for our business. We keep
our Business Plan around them.
> website: www.acc.co.nz
• Injury Prevention and ThinkSafe
• To contact the Offi ce of the Complaints Investigator
0800 THINKSAFE
0800 650 222
(0800 844 657)
[email address]
Fax: (04) 918 7580
• Employer levies
(09) 915 8317
0800 222 776
[email address]
• Medical Misadventure
Freefax: 0800 222 003
0800 735 566
• Self-employed levies
Fax: (04) 918 7672
0508
4COVER (0508 426 837)
• Sensitive Claims
[email address]
0800 735 566
Freefax: 0800 222 003
Fax: (04) 918 7577
• For agents’ and fi nancial advisors’ queries
• Preventing fraud
0800 222 991
0800 372 830
Freefax: 0800 222 003
• Claims
0800 101 996
