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Half Year Economic and Fiscal Update 2012

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

Quantifiable Contingent Liabilities and Contingent Assets

Contingent liabilities
Guarantees and indemnities Status[16] ($millions)
Other guarantees and indemnities Unchanged 186
Uncalled capital    
Asian Development Bank Unchanged 2,904
International Bank for Reconstruction and Development Unchanged 999
International Monetary Fund - arrangements to borrow Unchanged 1,051
International Monetary Fund - promissory notes Unchanged 1,141
Other uncalled capital Unchanged 45
Legal proceedings and disputes    
Tax disputes Unchanged 398
Other legal proceedings and disputes Unchanged 46
Other quantifiable contingent liabilities    
Kyoto protocol units Unchanged 100
Other quantifiable contingent liabilities Unchanged 305
Total quantifiable contingent liabilities   7,175
Contingent assets
Guarantees and indemnities Status[17] ($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

Contingent liabilities

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


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


  • [16]Relative to reporting in the Financial Statements of the New Zealand Government for the year ending 30 June 2012.
  • [17]Relative to reporting in the Financial Statements of the New Zealand Government for the year ending 30 June 2012.
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