Contingent liabilities — unquantifiable
Attorney-General's
Native title costs
The Australian Government has offered to assist the States in meeting native title compensation costs arising under the Native Title Act 1993. The amounts that might be paid by the Australian Government will be subject to the terms of financial assistance agreements being negotiated with the States. No agreements have been entered into to date. The Australian Government's liability cannot be quantified due to uncertainty about the number and effect of compensable acts, both in the past and in the future, and the value of native title affected by those acts. Similarly, it is not possible to quantify the liability for compensable acts for which the Australian Government may be directly liable.
The Australian Government has also offered to assist the States with the costs of bodies performing native title functions under state legislation. The extent of this assistance will depend on the existence of such bodies, the timing of their recognition and the extent of their use.
Other indemnities
The Australian Federal Police (AFP) carry a range of indemnities and undertakings, normally of a short-term nature, relating to business, training activities and other activities involving contracts, agreements and other AFP arrangements. Indemnities issued by the AFP cover potential losses or damages for which the Australian Government would be liable. The instances of unquantifiable contingencies are considered remote.
Defence
HMAS Melbourne and HMAS Voyager damages claims
Former crew members of HMAS Melbourne have instituted legal proceedings against the Australian Government claiming damages for injuries allegedly caused by the HMAS Voyager/HMAS Melbourne collision on 10 February 1964. One hundred claims remain current. A number of the current claims are statute barred under applicable state laws. In those cases, the plaintiffs will require an extension of time prior to progressing their claims for damages. Nine dependency claims arising from that collision have also been commenced by the dependants of deceased former members of the crew of HMAS Voyager. Further claims are likely to be made in connection with the collision. The most recent claim was commenced in February 2006.
Finance and Administration
Potential claims relating to superannuation benefits
On 8 May 2006, the Australian Capital Territory court of Appeal found against the Commonwealth of Australia on a claim for negligent misstatement relating to superannuation benefits for a former employee of the Department of the Interior. The High Court of Australia has granted the Commonwealth special leave to appeal the decision of the ACT courts. The potential liability for the first 400 cases is estimated at $235 million. The High Court decision is expected in early 2007. This is a test case for several hundred named plaintiffs. There is potential for more claims to arise from other former employees depending on the terms of the final judgment.
Telstra Corporation Limited — company, directors and senior executives' indemnities
Certain indemnities have been provided to Telstra, its directors and selected senior executives in connection with their assistance in the preparation for the Telstra 3 sale of approximately two thirds of the Australian Government's residual shareholding in Telstra. The indemnities cover liabilities that may arise from actions undertaken in support of the Telstra 3 sale.
Telstra Corporation Limited — indemnity for unauthorised disclosure of information
The Australian Government has executed a mutual confidentiality agreement with Telstra Corporation Limited and indemnified Telstra against the unauthorised disclosure or use by the Australian Government of certain confidential information provided during the Telstra 3 sale process for Telstra 3 sale-related purposes.
Tuggeranong Office Park Pty Ltd — shareholder indemnity
The Australian Government issued bonds in 1989 to finance the construction of the Tuggeranong Office Park (TOP) complex in Canberra. The Australian Government issued a conditional indemnity to the bondholders at the time for all 'losses, liabilities, costs, expenses and damages' incurred by virtue of their shareholding. The Budget currently provides for this conditional indemnity, but this estimate may vary due to market factors and selection of the best option to settle the bonds. It is currently planned that TOP will be sold prior to the conditional indemnity crystallising in August 2008 when the bonds mature. It is expected that this will result in the conditional indemnity being extinguished.
Health and Ageing
Australian Red Cross Society — indemnities
The Deed of Agreement between the Australian Red Cross Society (ARCS) and the National Blood Authority (NBA) in relation to the operation of the Australian Red Cross Blood Society (ARCBS) includes certain indemnities and a limit of liability in favour of ARCS. These cover a defined set of potential business, product and employee risks and liabilities arising from the operations of ARCBS. The indemnities and limitation of liability only operate in the event of the expiry and non-renewal, or the earlier termination, of the Deed of Agreement, and only within a certain scope. They are also subject to appropriate limitations and conditions including in relation to mitigation, contributory fault, and the process of handling relevant claims.
Immigration and Multicultural Affairs
Systems development — liability limit
The Department of Immigration and Multicultural Affairs (DIMA) has entered into a contract with IBM Australia (IBM) for the provision of systems development services for the department. The arrangement facilitates the delivery of the new departmental programme 'Systems for People'. DIMA has agreed to limit IBM's liability to an overall maximum of $150 million for certain causes of action.
Industry, Tourism and Resources
Liability for damages caused by Kistler space activities
In accordance with the UN Convention on International Liability for Damage Caused by Space Objects, an agreement was signed in 1998, amended in 1999, between the Department of Industry, Tourism and Resources, Kistler Woomera Pty Ltd and Spaceport Woomera Pty Ltd to support the launching of the K-1 Aerospace Vehicle and satellites into space from Australia. Kistler Woomera Pty Ltd received a major contract from NASA in August 2006, and launches are expected to commence at Woomera in South Australia from 2008. Under the agreement, the Australian Government provides indemnity support to a maximum of US$1.5 billion (approximately A$2.0 billion) above the level of insurance cover obtained under the requirements of the agreement.
Treasury
Terrorism insurance — commercial cover
The Terrorism Insurance Act 2003 established a scheme for replacement terrorism insurance covering damage to commercial property including associated business interruption losses and public liability claims. The Australian Reinsurance Pool Corporation (ARPC) uses reinsurance premiums paid by insurers to meet its administrative expenses and to build a fund and purchase reinsurance to help meet future claims. In September 2006, the Government announced that, as a result of a review of the scheme, the fund would no longer be limited to $300 million. The Commonwealth guarantees to pay any liabilities of the ARPC, but the Treasurer must declare a reduced payout rate to insureds if the Commonwealth's liability would otherwise exceed $10 billion.