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Note 7.1: Contingent assets and liabilities

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7.1A: Departmental – Contingent assets and liabilities

  Claims for damages or costs Total
  2016 2015 2016 2015
  $'000 $'000 $'000 $'000
Contingent assets        
Balance from previous period 198 232 198 232
New contingent assets recognised 155 23 155 23
Re-measurement (8) 6 (8) 6
Assets realised - (12) - (12)
Rights expired - (51) 0 (51)
Total contingent assets 345 198 345 198
         
Contingent liabilities        
Balance from previous period (40) (184) (40) (184)
New contingent liabilities recognised - (40) - (40)
Re-measurement (110) (20) (110) (20)
Liabilities realised 150 120 150 120
Rights expired - 84 - 84
Total contingent liabilities - (40) - (40)
Net contingent assets 345 158 345 158

Quantifiable contingencies

The Department estimates nil contingent liabilities in respect to claims for damages/costs (2015: $40,000). This amount represents an estimate of the Department’s liability based on precedent in such cases. The Department is defending the claims.

The Department estimates $345,000 of contingent assets in respect of claims for damages/costs (2015: $198,000). This amount represents the Department’s estimate of claims against persons/organisations based on ongoing cases. The estimate is based on precedent in such cases.

Unquantifiable contingent liabilities

The Department is party to a number of civil litigation matters arising out of its statutory duty to administer the laws for which it is responsible. As at the date of this report, there are no matters where costs have been awarded against the Department.

The Department has become aware of potential obligations in relation to certain remuneration arrangements. As at the date of this financial report, no legal obligation of the Department has been established, and the Department does not accept future liability.

Unquantifiable contingent assets

Conversely, the Department, like any other party to civil litigation, may be entitled to recover costs arising out of such litigation if it is successful. There are no matters at the date of this report where the Department reasonably expects to have an award of costs in its favour.

Future compensation claims

The Scheme for Compensation for Detriment caused by Defective Administration (the CDDA Scheme) allows agencies to provide compensation to persons who have been adversely affected by their maladministration, but who have no legal means to seek redress, such as a legal claim. It is not possible to estimate the value of future CDDA claims.

Accounting policy

Contingent liabilities and contingent assets are not recognised in the balance sheet but are reported in the relevant schedules and notes. They may arise from uncertainty as to the existence of a liability or asset or represent an asset or liability in respect of which the amount cannot be reliably measured. Contingent assets are disclosed when settlement is probable but not virtually certain, and contingent liabilities are disclosed when settlement is greater than remote.

7.1B: Administered – contingent assets and liabilities

Unquantifiable administered contingencies

Disaster Recovery Payments

The Australian Government provides funding to states and territories through the Natural Disaster Relief and Recovery Arrangements (NDRRA) to assist with natural disaster relief and recovery costs. A state or territory may claim NDRRA funding if a natural disaster occurs and state and territory relief expenditure for that event meets the requirements set out in the NDRRA Determination. For major disasters, payments to individuals may be approved under the Social Security Act 1991. These include the Disaster Recovery Payment and Disaster Recovery Allowance.

At balance date, the Department is unable to reliably estimate the future impact of natural disasters that have not yet been claimed, and no provision for these claims has been recognised in the administered financial statements.

Australian Victims of Terrorism Overseas Payment

Under the Australian Victims of Terrorism Overseas scheme, the Commonwealth provides financial assistance to Australians who are victims of an overseas terrorist act that has been declared by the Prime Minister.

At balance date, the Department is unable to reliably estimate the future value of these potential claims, and no provision for these claims has been recognised in the administered financial statements.

Native Title Costs and Agreements (access to geospatial data)

Under the Native Title Act 1993, the Commonwealth will be liable for any compensation found to be payable in respect of compensable acts for which the Commonwealth is responsible.

The Australian Government has entered into agreements with state and territory governments to access their geospatial land tenure data, which is essential to support the National Native Title Tribunal in achieving its outcomes. Under these agreements, the Australian Government provides indemnities against third-party claims arising from errors in the data.

At balance date, the Department is unable to reliably measure the future value of potential claims, and no provision for these claims has been recognised in the administered financial statements.

Future compensation claims

The Scheme for Compensation for Detriment caused by Defective Administration (the CDDA Scheme) allows agencies to provide compensation to persons who have been adversely affected by their maladministration, but who have no legal means to seek redress, such as a legal claim. It is not possible to estimate the value of future CDDA claims.

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