Note 9: Commitments and contingencies

9.1 Schedule of commitments

as at 30 June 2007

	2007 $’000	2006 $’000
Capital commitments
Land and buildings	3,160	5,324
Total	3,160	5,324
Lease commitments
Operating leases	12,865	20,712
Total	12,865	20,712
By Maturity
Capital commitments
One year or less	3,160	5,324
Total capital commitments	3,160	5,324
Operating lease committments
One year or less	5,865	6,168
From one to five years	6,986	10,404
Over five years	14	4,140
Total operating lease commitments	12,865	20,712
Total	16,025	26,036

NB: Commitments are GST inclusive where relevant.

The department leases property under operating leases expiring from one to ten years. Leases generally provide the department with a right of renewal at which time all terms are re-negotiated. Lease payments comprise a base amount plus an incremental contingent rental. Contingent rentals are based on either movements in the Consumer Price Index (CPI) or operating criteria.

As at 30 June 2007, the department had a number of capital commitments of which $2.724 million was for Mayfield Primary School - redevelopment and the rest split across five minor projects.

9.2 Contingent assets and liabilities

Contingent assets and liabilities are not recognised in the Balance Sheet due to uncertainty regarding the amount or timing of the underlying claim or obligation.

Unquantifiable contingencies

At 30 June 2007, the department had a number of legal claims against it generally relating to personal injury arising from accidents on departmental premises. It is not possible to estimate the amounts of any eventual payments that may be required in relation to these claims.

The department has a number of leases on property it occupies. Some of these leases contain a ‘make good provision’. A liability for these provisions has not been recognised in the Balance Sheet as the value of these provisions cannot be reliability measured. The majority of leases cover a five to ten year period and are generally renewed.

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