![Budget Economic and Fiscal Update [2007]](/mastheads/budget/2007/spch-fsr-efu07.gif){kind=small}
Contingent Liabilities
Contingent liabilities are costs that the Crown will have to face if a particular event occurs. Typically, contingent liabilities consist of guarantees and indemnities, legal disputes and claims, and uncalled capital. The contingent liabilities facing the Crown are a mixture of operating and balance sheet risks, and they can vary greatly in magnitude and likelihood of realisation. In general, if a contingent liability were realised it would reduce the operating balance and net worth, and increase Crown debt. However, in the case of contingencies for uncalled capital, the negative impact would be restricted to Crown debt.
Where contingent liabilities have arisen as a consequence of legal action being taken against the Crown, the amount shown is the amount claimed and thus the maximum potential cost. It does not represent either an admission that the claim is valid or an estimation of the possible amount of any award against the Crown.
Only contingent liabilities involving amounts of over $10 million are separately disclosed. Contingent liabilities below $10 million are included in the “other quantifiable contingent liabilities” total. Comparatives have been adjusted where appropriate to align with the disclosure of new “material” contingent liabilities. The total amount of prior years’ contingent liabilities remains unchanged.
Contingent liabilities have been stated as at 31 March 2007, being the latest set of published contingent liabilities.
Details of each of the following contingent liabilities can be accessed from the Treasury website at www.treasury.govt.nz/forecasts/befu/2007/.
Quantifiable Contingent Liabilities
| Guarantees and indemnities | Status [10] | ($ million) |
|---|---|---|
| Cook Islands – Asian Development Bank loans | Changed | 13 |
| Indemnification of receivers and managers – Terralink Limited | Unchanged | 10 |
| Indemnification of touring exhibitions | Unchanged | 349 |
| Ministry of Justice – Treaty settlement, tax liabilities | Unchanged | 105 |
| Ministry of Transport – funding guarantee | Unchanged | 10 |
| Post Office Bank – guaranteed deposits | Unchanged | 10 |
Guarantees and indemnities of SOEs and Crown entities | Unchanged | 19 |
| Other guarantees and indemnities | Changed | 5 |
| 521 | ||
| Uncalled capital | ||
| Asian Development Bank | Changed | 1,039 |
| European Bank for Reconstruction and Development | Unchanged | 13 |
| International Bank for Reconstruction and Development | Changed | 1,151 |
| 2,203 | ||
| Legal proceedings and disputes | ||
| Health – legal claims | Unchanged | 90 |
| Tax in dispute | Changed | 715 |
| Other legal claims against SOEs and Crown entities | Unchanged | 25 |
| Other legal claims | Unchanged | 101 |
| 931 | ||
Other quantifiable contingent liabilities | ||
| International finance organisations | Changed | 1,749 |
| Reserve Bank – demonetised currency | Unchanged | 22 |
| Social Development – claim for judicial review | Changed | 93 |
| Transpower New Zealand Limited | Unchanged | 98 |
| Other quantifiable contingent liabilities of SOEs and Crown entities | Unchanged | 37 |
| Other quantifiable contingent liabilities | Changed | 20 |
| 2,019 | ||
| Total quantifiable contingent liabilities | 5,674 |
Unquantifiable Contingent Liabilities
| Guarantees and indemnities | Status |
|---|---|
| Asure New Zealand Limited | Unchanged |
| At Work Insurance Limited | Unchanged |
| Auckland Rail lease | Unchanged |
| Bona Vacantia property | Unchanged |
| Building Industry Authority | Unchanged |
| Contact Energy Limited | Unchanged |
| Crown Research Institutes (CRIs) | Unchanged |
| District Court Judges, Justices of the Peace, Coroners and Disputes Tribunal | Changed |
| District Health Boards – director indemnity – (DHBs) | Unchanged |
| Earthquake Commission (EQC) | Unchanged |
| Electricity Corporation of New Zealand Limited (ECNZ) | Unchanged |
| Ministry of Fisheries – indemnity provided for delivery of registry services | Unchanged |
| Genesis Power Ltd (Genesis Energy) | Unchanged |
| Geothermal carbon tax indemnity | Unchanged |
| Housing New Zealand Corporation (HNZC) | Unchanged |
| Indemnities against acts of war and terrorism | Unchanged |
| Maui Partners | Unchanged |
| National Provident Fund | Unchanged |
| New Zealand Railways Corporation | Unchanged |
| Persons exercising investigating powers | Unchanged |
| Ports of Auckland | Unchanged |
| Public Trust | Unchanged |
| Purchasers of Crown operations | Unchanged |
| State Insurance and Rural Bank – tax liabilities | Unchanged |
| Synfuels-Waitara Outfall Indemnity | Unchanged |
| Tainui Corporation | Unchanged |
| Toll NZ Ltd – purchase of rail network assets | Unchanged |
| Works Civil Construction | Unchanged |
| Works Consultancy Services | Unchanged |
| Other unquantifiable contingent liabilities | |
| Abuse claims | Unchanged |
| Accident Compensation Corporation (ACC) litigations | Unchanged |
| Environmental liabilities | Unchanged |
| Rugby World Cup 2011 | Unchanged |
| Sale of Crown assets | Unchanged |
| Treaty of Waitangi claims | Unchanged |
| Treaty of Waitangi claims – settlement relativity payments | Unchanged |
| Other contingencies | |
| Foreshore and seabed | Unchanged |
Notes
- [10]Relative to reporting in the 31 December 2006 Financial Statements of the Government of New Zealand.
