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.

Contingent payments

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

Natural Disaster Relief and Recovery Arrangements (NDRRA)

(a) While the accounting treatment for NDRRA currently results in negative accrual estimates in 2017‑18 and 2018‑19, the Commonwealth does not intend to seek to recoup funds from relevant states in these years.

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 natural disasters including the bushfires in South Australia in January 2015, Tropical Cyclone Lam in the Northern Territory in February 2015, Tropical Cyclone Marcia in Queensland in February 2015, Tropical Cyclone Olwyn in Western Australia in March 2015 and Tropical Cyclone Nathan in both the Northern Territory and Queensland in March 2015. Payments are also being made for past disasters such as the bushfires in Victoria during February and March 2014, the Blue Mountains bushfires in New South Wales in October 2013 and Tropical Cyclone Oswald in Queensland in January 2013.

The Commonwealth recognises 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 2014‑15 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.