Contingent liabilities — quantifiable
Defence and Defence Materiel Organisation
Indemnities and remote contingencies
Defence carries 8,758 instances of unquantifiable remote contingent liabilities and 129 instances of quantifiable remote contingent liabilities, to the value of $2.9 billion, unchanged from the amount reported in the 2010‑11 Budget. The Defence Materiel Organisation carries 525 instances of contingencies (including Foreign Military Sales) that are unquantifiable and 78 contingencies that are quantifiable, to the value of $4.4 billion, down from $5.9 billion reported in the 2010‑11 Budget. While these contingencies are considered remote, they have been reported in aggregate for completeness.
Education, Employment and Workplace Relations
Comcare liability for additional workers' compensation payments
Comcare has a quantifiable contingency in respect of future statutory workers' compensation claims for asbestos related diseases amounting to $45.6 million. This contingency relates to a decision in the Federal Court, Comcare v Etheridge [2006] Federal Court of Australia Full Court (FCAFC) decision number 27.
Finance and Deregulation
Sale of Sydney Airports Corporation Limited
An indemnity has been provided to Southern Cross Airports Corporation as purchaser of the Sydney Airports Corporation Ltd in the event of a liability arising under Chapter 3 of the Duties Act 1997 (NSW) by reason of the sale of shares in Sydney Airports Corporation Ltd constituting a relevant acquisition in a land-rich private corporation. The New South Wales Office of State Revenue issued a notice of assessment on 17 November 2006. The Australian Government maintains that there are no grounds for the assessment. Action has been initiated in the NSW Supreme Court to overturn the assessment. The amount disputed is estimated at $531.9 million as at 30 June 2010.
Foreign Affairs and Trade
Export Finance and Insurance Corporation
The Australian Government guarantees the due payment by the Export Finance and Insurance Corporation (EFIC) of money that is, or may at any time become, payable by EFIC to anybody other than the Government. The Government also has in place a $200 million callable capital facility available to EFIC on request to cover liabilities, losses and claims. As at 30 September 2010, the Government's total contingent liability was $2.7 billion, up from $2.3 billion at the 2010‑11 Budget. This comprises EFIC's liabilities to third parties ($2.2 billion) and EFIC's overseas investment insurance, contracts of insurance and guarantees ($0.5 billion). Of the total contingent liability $0.7 billion is held on the National Interest Account.
Treasury
Australian Taxation Office — tax disputes
At any point in time, the ATO is involved in litigation relating to tax disputes. The outcome of these disputes is uncertain and will be confirmed at a future date through a court ruling or when an agreement is reached.
As at 30 June 2010, the estimated aggregate value of tax in dispute was $6.2 billion.
The decisions in relation to the cases may, in some instances, set precedents creating an additional unquantifiable contingent liability.
International financial institutions — uncalled capital subscriptions
Australia has had uncalled capital subscriptions in the International Bank for Reconstruction and Development (IBRD) since 1947. The Government will contribute additional resources to the IBRD as part of its recently announced general capital increase. G20 Leaders have committed to ensure that the IBRD and other multilateral development banks have sufficient resources to address key development challenges and fulfil their development mandate. The paid-in component of Australia's contribution was a measure in the 2010‑11 Budget. As part of this process, Australia will also increase its uncalled capital subscription so that it totals US$3.6 billion (estimated value A$3.7 billion as at 30 September 2010).
Australia has also had uncalled capital subscriptions in the European Bank for Reconstruction and Development (EBRD) since 1991. The Government will increase its uncalled capital subscription to the EBRD towards its recently announced general capital increase so that it totals EUR237.5 million (estimated value A$333.6 million as at 30 September 2010). The financial implications of the paid-in shares received free of charge from this general capital increase were reported as a measure in the Government's Economic Statement in July 2010.
Also, as at 30 September 2010 the Australian Government had uncalled capital subscriptions in the Asian Development Bank of SDR5.8 billion (estimated value A$9.4 billion), and the Multilateral Investment Guarantee Agency of US$26.5 million (estimated value A$27.4 million).
None of these international financial institutions have ever drawn on Australia's uncalled capital subscriptions.
Australia has made a line of credit available to the International Monetary Fund (IMF) under its New Arrangements to Borrow (NAB) since 1998. In line with G20 Leaders' commitments, Australia has agreed to join with other countries to increase its credit line under an expanded NAB. Australia's contribution to the expanded NAB will be by way of a SDR4.4 billion contingent loan (estimated value A$7.1 billion as at 30 September 2010), replacing Australia's existing SDR801.3 million commitment. The funds would be drawn upon by the IMF only if needed and would be repaid in full with interest.
Reserve Bank of Australia — guarantee
This contingent liability relates to the Australian Government's guarantee of the liabilities of the Reserve Bank of Australia. It is measured as the Bank's total liabilities excluding capital, reserves, and Australian Government deposits. The major component of the Bank's liabilities is notes (that is, currency) on issue. Notes on issue amount to $49.9 billion, as at 7 October 2010, and the total guarantee is $58.1 billion, up from $57.9 billion as reported in the 2010‑11 Budget.
Standby loan facility for the Government of Indonesia
Australia has made up to US$1 billion (estimated value A$1.03 billion, as at 30 September 2010) available to the Government of Indonesia in the form of a standby loan facility, to be drawn down should Indonesia be unable to raise sufficient funds on global capital markets due to the impact of the global financial crisis. The facility was announced in December 2008 and will continue to be available until the end of 2010. A drawdown from the facility will be dependent on a request from the Indonesian Government and subject to certain criteria being met. Any funds provided will be repaid in full with interest. As at 30 September 2010 Indonesia had not requested any drawdown on the facility. Contributions to the standby loan facility have also been provided by the World Bank, the Asian Development Bank and the Government of Japan.
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