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Half Year Economic and Fiscal Update 2010

Contingent liabilities and 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.

Only contingent liabilities involving amounts of over $100 million are separately disclosed. Contingent liabilities below $100 million are included in the “other quantifiable contingent liabilities” total.

Contingent liabilities have been stated as at 31 October 2010, being the latest set of contingent liabilities reported.

Quantifiable contingent liabilities

Quantifiable contingent liabilities
Guarantees and indemnities Status [13] ($million)
Other guarantees and indemnities Changed 103

Uncalled capital

Asian Development Bank Changed 1,035
International Bank for Reconstruction and Development Changed 1,071

Other uncalled capital



Legal proceedings and disputes

Tax in dispute Changed 301
Other legal proceedings and disputes Changed 112

Other quantifiable contingent liabilities

International finance organisations Changed 1,501
Kyoto Protocol Units Changed 1,665
New Zealand Export Credit Office Changed 105
Other quantifiable contingent liabilities Changed 305
Total quantifiable contingent liabilities   6,243

Unquantifiable contingent liabilities

Unquantifiable contingent liabilities
Guarantees and indemnities Status
Airways New Zealand Unchanged
AsureQuality Limited Unchanged
At Work Insurance Limited Unchanged
Bona Vacantia property Unchanged
Contact Energy Limited Unchanged
Earthquake Commission (EQC) Unchanged
Electricity Corporation of New Zealand Limited (ECNZ) Unchanged
Genesis Power Limited - financial guarantees Unchanged
Genesis Power Limited - letters of credit and performance bonds Unchanged
Housing New Zealand Corporation (HNZC) Unchanged
Indemnities against acts of war and terrorism Unchanged

Indemnification of the Stadel Museum's touring exhibition


Justices of the Peace, Community Magistrates and
Disputes Tribunal Referees
Landcorp Farming Limited Unchanged
Maui Partners Unchanged
Meridian Energy - letters of credit and performance bonds Changed

National Provident Fund (NPF)


New Zealand Railways Corporation Unchanged
Persons exercising investigating powers Unchanged
Public Trust Unchanged
Reserve Bank of New Zealand Unchanged
Synfuels-Waitara Outfall Indemnity Unchanged
Tainui Corporation Unchanged

Other unquantifiable contingent liabilities

Abuse claims Unchanged
Accident Compensation Corporation (ACC) litigations Changed
Air New Zealand litigation Changed

Canterbury earthquake


Maui contracts Unchanged

Kordia Group Limited


Rugby New Zealand World Cup 2011 Limited Unchanged

Television New Zealand


Treaty of Waitangi claims Unchanged
Westpac New Zealand Limited Unchanged

The following contingent liabilities are no longer disclosed separately owing to the materiality criterion to disclose items separately being raised from $10 million to $100 million.

Guarantees and indemnities:

  • Air New Zealand
  • Cook Islands - Asian Development Bank loans
  • Indemnification of receivers and managers - Terralink Limited
  • Ministry of Transport - funding guarantee

Uncalled capital:

  • Bank for International Settlements
  • European Bank for Reconstruction and Development

Legal proceedings and disputes:

  • Accident Compensation Corporation
  • Health - legal claims
  • Kapiti West Link Road

Other quantifiable contingent liabilities:

  • Air New Zealand partnership
  • Crown Health Financing Agency
  • Inland Revenue - unclaimed monies
  • Reserve Bank - demonetised currency
  • State highway extension


  • [13]Relative to reporting in the Financial Statements of the Government of New Zealand for the year ended 30 June 2010.
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