Other Contingent Liabilities and Contingent Assets
Contingent liabilities are costs that the Crown will have to face if a particular event occurs, or present liabilities that are unable to be measured with sufficient reliability to be recorded in the financial statements (unquantifiable liabilities).
Typically, contingent liabilities consist of guarantees and indemnities, uncalled capital and legal disputes and claims. 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, or the amount becomes sufficiently reliable to record as a liability, it would reduce the operating balance and net worth and increase core Crown net debt. In the case of contingencies for uncalled capital, the negative impact would be restricted to core Crown net debt because the cost would be offset by the acquisition of capital.
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 possible assets that have arisen from past events but the amount of the asset, or whether it will eventuate, will not be confirmed until a particular event occurs.
Only contingent liabilities and contingent assets involving amounts of over $100 million are separately disclosed. Quantifiable contingencies less than $100 million are included in the “other quantifiable” total.
Some contingencies of the Crown are not able to be quantified. We have disclosed all unquantifiable contingent liabilities and contingent assets that are not expected to be remote.
Contingent liabilities have been stated as at 31 October 2012, being the latest set of reported contingent liabilities, except where the contingent liability has already been disclosed as a specific fiscal risk.
Details of each of the following contingent liabilities can be accessed from the Treasury website at www.treasury.govt.nz/budget/forecasts/hyefu2012.
Quantifiable Contingent Liabilities and Contingent Assets
| Guarantees and indemnities | Status[16] | ($millions) |
|---|---|---|
| Other guarantees and indemnities | Unchanged | 186 |
| 186 | ||
| Uncalled capital | ||
| Asian Development Bank | Unchanged | 2,904 |
| International Bank for Reconstruction and Development | Unchanged | 999 |
| International Monetary Fund - arrangements to borrow | Unchanged | 1,051 |
| International Monetary Fund - promissory notes | Unchanged | 1,141 |
| Other uncalled capital | Unchanged | 45 |
| 6,140 | ||
| Legal proceedings and disputes | ||
| Tax disputes | Unchanged | 398 |
| Other legal proceedings and disputes | Unchanged | 46 |
| 444 | ||
| Other quantifiable contingent liabilities | ||
| Kyoto protocol units | Unchanged | 100 |
| Other quantifiable contingent liabilities | Unchanged | 305 |
| 405 | ||
| Total quantifiable contingent liabilities | 7,175 |
| Guarantees and indemnities | Status[17] | ($millions) |
|---|---|---|
| Insurance claims - Canterbury earthquakes | Unchanged | 166 |
| Tax disputes | Unchanged | 149 |
| Other quantifiable contingent assets | Unchanged | 67 |
| Total quantifiable contingent assets | 382 |
Unquantifiable Contingent Liabilities and Contingent Assets
| Status | |
|---|---|
Guarantees and indemnities: |
|
| Air New Zealand | Unchanged |
| Airways Corporation of New Zealand | Unchanged |
| AsureQuality Limited | Unchanged |
| Contact Energy Limited | Unchanged |
| Earthquake Commission (EQC) | Unchanged |
| Housing New Zealand Corporation | Unchanged |
| Justices of the Peace, Community Magistrates and Disputes Tribunal Referees | Unchanged |
| Maui Mining Companies | Unchanged |
| Maui Partners | Unchanged |
| National Provident Fund | Unchanged |
|
New Zealand Aluminium Smelter and Comalco |
Unchanged |
| New Zealand Local Authorities | 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 |
| Westpac New Zealand Limited | Unchanged |
Legal claims and proceedings: |
|
| Accident Compensation Corporation (ACC) litigations | Unchanged |
| Air New Zealand litigation | Unchanged |
| Television New Zealand | Unchanged |
| Treaty of Waitangi claims | Unchanged |
Other unquantifiable contingent liabilities: |
|
| Criminal Proceeds (Recovery) Act 2009 | Unchanged |
| Environmental liabilities | Unchanged |
| Landcorp Farming Limited | Unchanged |
