Reserves Policy Section 128 (4) of the Accident Rehabilitation and Compensation Insurance Act 1992, requires the Minister for ARCI by 30 September 1997, to publish in the New Zealand Gazette and lay before the House of Representatives a copy of the reserves policy of the Accident Rehabilitation and Compensation Insurance Corporation (ACC). The ACC reserves policy is that: ``Premiums shall be set with the intention of meeting the current cost of claims and administration-related expenses in the year in which the premiums apply (the ``pay-as-you-go'' cost), subject to adjustment relating to the level of reserves as described below. The scheme shall hold reserves to: (a) Minimise the likelihood that short-term borrowing will be required as a result of: (i) Unfavourable variations from forecast expenditure and/or income; or (ii) The need for working capital; and (b) Allow the progression of premium rates to be smoothed having regard to: (i) Adjustments needed to restore reserves to the target level; and (ii) Expected changes in the pay-as-you-go costs for future years. The target level of reserves at the end of a premium year is the equivalent of 6 months of the subsequent years' pay-as-you-go cost. Premiums may be set at rates other than the pay-as-you-go cost, and reserves may be maintained at levels other than the target, under the following conditions: (a) Reserves shall be restored to the target level over a reasonable period (generally not to exceed 5 years); and (b) A negative reserve shall be eliminated as soon as practicable.'' The reserves policy only applies to the Employers', Earners' and Motor Vehicle Accounts (and Medical Misadventure in the event of a separate premium for this account being introduced in future). Hon. JENNY SHIPLEY, Minister for ARCI.