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 $100 million are included in the “other quantifiable contingent liabilities” total.
Contingent liabilities have been stated as at 31 October 2010, being the latest set of contingent liabilities reported.
Quantifiable contingent liabilities
| Guarantees and indemnities | Status [13] | ($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 |
Changed |
45 |
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
| 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 |
New |
| Justices of the Peace, Community Magistrates and Disputes Tribunal Referees |
Unchanged |
| Landcorp Farming Limited | Unchanged |
| Maui Partners | Unchanged |
| Meridian Energy - letters of credit and performance bonds | Changed |
|
National Provident Fund (NPF) |
Unchanged |
| 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 |
New |
| Maui contracts | Unchanged |
|
Kordia Group Limited |
Unchanged |
| Rugby New Zealand World Cup 2011 Limited | Unchanged |
|
Television New Zealand |
Unchanged |
| 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
Notes
- [13]Relative to reporting in the Financial Statements of the Government of New Zealand for the year ended 30 June 2010.
