Contingent liabilities: indemnities, guarantees, warranties on behalf of the Commonwealth

Contingent liabilities are commitments that may give rise to a cost as a result of a future event. They often result from indemnities, guarantees, warranties and certain liability caps in contracts.  Contingent liabilities are generally used to allocate risk between parties to an arrangement. The Commonwealth’s policy is that risk should be managed by the party best placed to manage it.

Section 60 of the PGPA Act authorises the Finance Minister to grant an indemnity, guarantee or warranty on behalf of the Commonwealth. This power has been delegated by the Finance Minister to accountable authorities of non-corporate Commonwealth entities. However the Finance Minister has not delegated the power to enter into loan guarantees.

This Resource Management Guide provides guidance on granting indemnities, guarantees and warranties on behalf of the Commonwealth:

For further information on the delegation from the Finance Minister see the PGPA Delegations page.

For more information contact: pmra@finance.gov.au

Last updated: 06 December 2016