Contingent liabilities — quantifiable
Defence and Defence Materiel Organisation
Indemnities and remote contingencies
As at 30 September 2011, Defence carried 622 (up from 312) instances of quantifiable remote contingent liabilities, to the value of $5.5 billion, an increase on the $3.6 billion reported in the 2011‑12 Budget. As at 30 September 2011, the Defence Materiel Organisation carried 105 contingencies that are quantifiable, to the value of $3.5 billion, a decrease on the $4.7 billion reported in the 2011‑12 Budget. While these contingencies are considered remote, they have been reported in aggregate for completeness.
Finance and Deregulation
Litigation — Davis Samuel case
The Department of Finance and Deregulation (Finance) is involved in litigation in which a counter‑claim for damages has been lodged against the Australian Government. The litigation relates to the Davis Samuel case where Finance is engaged in legal action seeking recovery of funds misappropriated during 1998. The counter‑claim, which is being vigorously defended by the Government, seeks damages of $4.3 billion. Hearing of the Government's claim, and the counter‑claim, concluded in the ACT Supreme Court in September 2008. Judgment is now expected to be delivered in early 2012.
Sale of Sydney Airports Corporation Limited
An indemnity was provided to Southern Cross Airports Corporation as the purchaser of the Sydney Airports Corporation Ltd (SACL) in the event of a liability arising under Chapter 3 of the Duties Act 1997 (NSW) by reason of the sale of shares in SACL 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 and action has been initiated in the New South Wales Supreme Court to overturn the assessment. The amount disputed is estimated at $576.5 million as at 31 October 2011.
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 any body 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 2011, the Government's total contingent liability was $3.4 billion, up from $3.0 billion at the 2011‑12 Budget. The $3.4 billion contingent liability comprises EFIC's liabilities to third parties ($2.9 billion) and EFIC's overseas investment insurance, contracts of insurance and guarantees ($0.5 billion). Of the total contingent liability, $2.7 billion relates to EFIC's Commercial Account and $0.7 billion relates to the National Interest Account.
Immigration and Citizenship
Education Services to Minors in Alternative Places of Detention — liability limit
The Australian Government, through the Department of Immigration and Citizenship (DIAC) has entered into a Memorandum of Understanding (MoU) with the State of Western Australia for the provision of an education program to minors in immigration detention at Leonora Alternative Place of Detention. This MoU commenced on 28 July 2010 and was extended for the 2011 school year by way of an exchange of letters (dated 7 October 2010) between DIAC and the Western Australia Government. The Australian Government's liability to the State is limited to the amount of $20 million in aggregate.
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 2011, the estimated aggregate value of tax in dispute was $8.2 billion.
Guarantees under the Commonwealth Bank Sale Act 1995
Under the terms of the Commonwealth Bank Sale Act 1995, the Australian Government has guaranteed various superannuation and other liabilities amounting to $4.5 billion as of 30 June 2011. Of this amount, $0.8 billion is attributable to liabilities of the Commonwealth Bank of Australia and $3.7 billion is attributable to liabilities of the Commonwealth Bank Officers' Superannuation Corporation.
International Financial Institutions — uncalled capital subscriptions
The Australian Government has held 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 the general capital increase agreed in 2010. The paid‑in component of Australia's contribution was a measure in the 2010‑11 Budget. As part of this process, Australia will increase its uncalled capital subscription so that it totals US$3.6 billion (estimated value of A$3.6 billion as at 18 November 2011).
Australia has also held uncalled capital subscriptions in the European Bank for Reconstruction and Development (EBRD) since 1991. The Government increased its uncalled capital subscription (effective 20 April 2011) to the EBRD as part of its 2010 general capital increase so that it totals EUR237.5 million (estimated value of A$320.3 million as at 18 November 2011). The financial implications of the paid‑in component were reported as a measure in the 2010‑11 MYEFO.
The Australian Government also held uncalled capital subscriptions in the Asian Development Bank of US$7.0 billion (estimated value of A$7.0 billion as at 18 November 2011), and the Multilateral Investment Guarantee Agency of US$26.5 million (estimated value of A$26.5 million as at 18 November 2011).
None of these international financial institutions have ever drawn on Australia's uncalled capital subscriptions.
International Monetary Fund
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 joined with other countries to increase its credit line under an expanded NAB. When the expanded NAB came into effect on 11 March 2011, Australia's NAB credit arrangement increased from SDR801.3 million (estimated value of A$1.2 billion as at 4 October 2011) to SDR4.4 billion (estimated value of A$6.7 billion). This is a contingent loan to help ensure that the IMF has the resources available to maintain stability and support recovery in the global economy. The funds will be drawn upon by the IMF as needed to supplement the IMF's usual quota resources and will 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 amounted to $51.9 billion as at 20 October 2011, and the total guarantee was $56.7 billion, down from $58.7 billion at the 2011‑12 Budget.
If www.budget.gov.au responds slowly or you are having trouble downloading a document, try one of the Budget Website Mirrors
Note: Where possible, Budget documents are available in HTML and for downloading in Portable Document Format(PDF). If you require further information on any of the tables or charts on this website, please contact The Treasury.
