Home > Budget Paper No. 3 > Part 2: Payments for Specific Purposes > Contingent payments

Part 2: Payments for Specific Purposes (Continued)

Contingent payments

Contingent payments arise where the Commonwealth has committed to provide compensation when an event occurs or otherwise guarantees the States' financial position. Payments to the States will only arise if the relevant event occurs.

Table 2.11 provides information on contingent payments.

Table 2.11: Contingent payments to the States

$million	2011‑12	2012‑13	2013‑14	2014‑15	2015‑16
National Partnership payments
Exceptional Circumstances Assistance	15.7	-	-	-	-
Hepatitis C settlement fund	0.7	0.7	0.7	0.7	0.7
Natural Disaster Relief and Recovery Arrangements	811.9	113.4	105.1	40.5	-
Total	828.3	114.1	105.8	41.2	0.7

Exceptional Circumstances assistance

$million	NSW	VIC	QLD	WA	SA	TAS	ACT	NT	Total
2011-12	12.4	-	-	-	3.3	-	-	-	15.7
2012-13	-	-	-	-	-	-	-	-	-
2013-14	-	-	-	-	-	-	-	-	-
2014-15	-	-	-	-	-	-	-	-	-
2015-16	-	-	-	-	-	-	-	-	-

The Intergovernmental Agreement on Rural Adjustment provides authority to the States to deliver the Exceptional Circumstances (EC) interest rate subsidy payments to eligible farm and small businesses in EC declared areas. This agreement is the basis for the administration of the program and outlines the respective roles of the Commonwealth and States, and their responsibilities and obligations.

Hepatitis C settlement fund

$million	NSW	VIC	QLD	WA	SA	TAS	ACT	NT	Total
2011-12	0.5	-	-	..	0.2	-	-	-	0.7
2012-13	0.5	-	-	0.1	0.1	-	0.1	0.1	0.7
2013-14	0.5	-	-	0.1	0.1	-	0.1	-	0.7
2014-15	0.5	-	-	0.1	0.1	-	0.1	-	0.7
2015-16	0.5	-	-	0.1	0.1	-	0.1	-	0.7

The Commonwealth is contributing to the States' schemes for out-of-court settlement costs for eligible individuals who contracted Hepatitis C through the blood supply service between 1985 and 1991.

A new spending measure associated with the Hepatitis C settlement fund is discussed in Budget Paper No. 2: Budget Measures 2012‑13.

Natural Disaster Relief and Recovery Arrangements (NDRRA)

NDRRA accrual estimates

$million	NSW	VIC	QLD	WA	SA	TAS	ACT	NT	Total
2011-12	46.8	46.6	703.9	12.0	0.1	0.3	-	2.2	811.9
2012-13	11.0	2.0	93.7	5.8	..	0.2	-	0.7	113.4
2013-14	6.8	0.9	96.3	1.0	-	-	-	-	105.1
2014-15	1.3	0.1	39.0	-	-	-	-	-	40.5
2015-16	-	-	-	-	-	-	-	-	-

The Commonwealth is providing funding under the NDRRA to assist the States with relief and recovery assistance following eligible natural disasters. This includes payments to the States in response to recent and past natural disasters including the November 2010 to February 2011 floods and Tropical Cyclone Yasi.

Subsequent to the 2011‑12 Budget, the Commonwealth reviewed the accounting treatment of payments made to the States under the NDRRA. The accounting treatment previously applied by the Commonwealth was to recognise grant liabilities under the NDRRA to the extent that (i) the services required to be performed by the State had been performed or (ii) the grant eligibility criteria had been satisfied, but payments due had not been made. The change in accounting treatment has resulted in the Commonwealth recognising a liability equal to the present value of future payments expected to be made to the States under the NDRRA. This is regardless of whether or not a State has completed eligible disaster reconstruction work or submitted an eligible claim under the NDRRA.

The estimated expenses in the table above reflect expected Commonwealth costs associated with disasters that have occurred in 2011‑12 and the 'unwinding of the discount' on the provision, which reflects the time value of money.

The estimated cash payments are presented in the table below, illustrating the estimated timing of when the Commonwealth expects to reimburse the States for costs incurred in relation to past disasters.

NDRRA cash estimates

$million	NSW	VIC	QLD	WA	SA	TAS	ACT	NT	Total
2011-12	-	-	2,991.6	1.7	3.0	-	-	7.9	3,004.2
2012-13	125.0	29.8	23.1	134.1	0.1	5.0	-	20.9	337.9
2013-14	153.9	22.6	1,636.9	28.4	-	-	-	-	1,841.7
2014-15	36.5	3.7	1,088.1	-	-	-	-	-	1,128.3
2015-16	-	-	-	-	-	-	-	-	-

A discussion of the NDRRA is provided in Part 1.

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