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Budget 2010 Home Page Budget Economic and Fiscal Update 2010

Contingent Liabilities and Contingent Assets

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 increase net debt. However, in the case of contingencies for uncalled capital, the negative impact would be restricted to net 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 amount of any award against the Crown.

Contingent assets are potential assets dependent on a particular event occurring.

Only contingent liabilities and contingent assets involving amounts of over $10 million are separately disclosed. Contingent liabilities and assets below $10 million are included in either the “other quantifiable contingent liabilities” total or the “other quantifiable contingent assets” total.

Contingent liabilities and contingent assets have been stated as at 31 March 2010, being the latest set of contingencies reported.

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