Australia’s disaster recovery funding arrangements determine how the financial burden of major floods, cyclones, fires and other natural disasters is shared between the Commonwealth, states and local governments. Proposed reforms would significantly change that balance, including moving to a 50–50 cost-sharing model, increasing eligibility thresholds and replacing existing resilience funding mechanisms. Queensland argues the changes could leave disaster-prone jurisdictions and councils carrying greater financial risk while reducing their capacity to rebuild infrastructure more resiliently, raising broader questions about how Australia’s national disaster safety net should operate as the frequency and cost of disasters increase.
Australia’s disaster recovery funding system is being reviewed at a time when the scale, frequency and cost of natural disasters are increasing. The Australian Government has indicated its intention to replace the existing Disaster Recovery Funding Arrangements with a reformed model that is intended to improve sustainability, consistency and administrative efficiency. Queensland supports the need for reform, but the Queensland Government believes several proposed changes would significantly reduce the financial support available after disasters, limit investment in resilience and transfer greater costs to state and local governments.
Speaking at the Disaster and Emergency Management Conference, Jimmy Scott, General Manager of Resilience and Recovery at the Queensland Reconstruction Authority, presented the agency’s analysis of the proposed Disaster Recovery Funding Framework. His purpose was to explain the practical effect of the reforms on Queensland councils, communities and recovery programs, while also showing why the consequences extend to every Australian jurisdiction.
The scale of Queensland’s exposure provides important context. The state is currently delivering the largest recovery, reconstruction and resilience program in Australia, valued at approximately $17 billion. The Australian Government contributes an average of around 64 cents in every dollar spent through the existing arrangements, while the state and local governments fund the remainder. Scott emphasised that Queensland remains deeply appreciative of this Commonwealth contribution and recognises the importance of a national funding partnership in responding to disasters that exceed the capacity of individual communities or jurisdictions, however, proposed reforms will reduce that support.
A funding shift with major consequences for Queensland
The proposed reforms follow the Independent Review of Commonwealth Disaster Funding, commonly known as the Colvin Review, which was released in late 2024. The review made 47 recommendations intended to improve the sustainability, effectiveness and equity of disaster funding. On 5 June 2026, the Australian Government announced its intention to proceed with reforms, including a new 50–50 funding model under which the Commonwealth and states would contribute equally to eligible recovery costs above an event threshold.
Scott stressed that the 50–50 cost-sharing model was not recommended in the Colvin Review. According to the Queensland Reconstruction Authority’s examination of the review and its appendices, the report called for funding arrangements to be reassessed with reference to simplicity, equity and jurisdictional capacity, but it did not propose that the Commonwealth contribution be reduced to 50 per cent.
This proposed funding shift is the greatest concern for Queensland because it would materially reduce Commonwealth support to the country’s most disaster-affected state. Under the current arrangements, Queensland meets the first approximately $190 million of eligible annual expenditure. The following tranche of around $140 million is shared equally, after which the Commonwealth generally contributes 75 per cent and Queensland contributes 25 per cent. In practice, the Commonwealth contribution averages approximately 64 per cent across the overall program.
The proposed model would replace that structure with an event-based threshold. Queensland would meet the first $2.7 million for every eligible disaster, after which costs would be divided equally between the state and Commonwealth. This is significant in a jurisdiction that can experience between 15 and 20 disasters in a season, with some states recording more than 30 events in a year.
The Queensland Reconstruction Authority calculated that if the proposed model had applied during the most recent financial year, Queensland would have received $713 million less from the Commonwealth. Over the most recent three-year period alone, the estimated reduction was $1.5 billion.
The growing recovery burden for councils and communities
These figures do not suggest that recovery work would necessarily disappear, but they raise an unavoidable question about who would pay for it. Scott explained that any reduction in Commonwealth support would need to be absorbed by the Queensland Government, transferred to local councils, shared between both levels of government or reflected in reduced services and recovery programs.
The effect on councils could be considerable, particularly in geographically large and disaster-prone regions with a limited revenue base. Scott presented an example involving an unnamed Queensland council whose local government area is approximately one and a half times the land mass of Tasmania and 46 per cent of the size of Victoria. Its disaster recovery program was valued at around $490 million, of which the Commonwealth contributed approximately $313 million under the existing arrangements. Under the proposed model, the Commonwealth contribution would fall by an estimated $68 million.
The reforms would also increase the threshold at which an event becomes eligible for shared Commonwealth and state assistance. The current small disaster criterion has remained at $240,000 for many years. The proposed arrangements would increase it to $2.7 million for larger states.
Although this difference is relatively small within a multi-billion-dollar recovery program, the effect is significant at a local level. The Queensland Reconstruction Authority identified 27 disasters that would not have qualified for Commonwealth–state funding under the higher threshold. Communities affected by localised storms, floods or other events could therefore face substantial damage without the event reaching the point at which national assistance becomes available.
Scott also raised concerns about uncertainty surrounding counter-disaster operations. These arrangements fund activities that protect people and property immediately before, during and after an event. They include sandbagging, evacuation centres, emergency clean-up and work required to make homes safe and habitable. They also support operations conducted by state agencies such as the Queensland State Emergency Service, Queensland Police Service, Queensland Fire Department and local governments.
Queensland has spent almost $200 million on counter-disaster operations over the past two years. Scott noted that this figure is considerably lower than expenditure in some fire-prone jurisdictions, where aerial firefighting and other immediate response activities can involve costs running into several hundred million dollars. A lack of certainty about whether these activities will remain eligible therefore creates a national concern, rather than one limited to Queensland.
Project-level funding could increase risk and delay assistance
Administrative changes are another source of concern. The current system lets recovery costs across a disaster program be managed collectively. Some projects will ultimately cost less than their estimated reconstruction cost, while others will cost more, allowing underspends and overruns to be balanced across the broader program.
The proposed model would administer costs at the individual project level. If a road repair, bridge reconstruction or culvert project finished below its approved estimate, the underspend would be returned. If another project exceeded its estimate, the additional cost would need to be met outside the funding arrangements, potentially by the council.
Scott argued that applying this approach across thousands of projects could create greater administrative complexity rather than less. Local governments would need to manage the financial risk associated with individual overruns while being unable to use savings from other completed works to offset them.
The proposed treatment of exceptional assistance could also delay support for businesses, primary producers, not-for-profit organisations and communities. These Category C and D measures are agreed between the Prime Minister and Premier when ordinary recovery programs are insufficient. They can include economic recovery programs, environmental restoration, small business grants and support for primary producers.
Under the proposed arrangements, states would need to satisfy more extensive evidence and planning requirements before requesting this support, potentially including a completed recovery plan. Scott explained that formal recovery plans can take between six and nine months to prepare. Queensland can currently mobilise some exceptional assistance within days or weeks, so additional requirements could postpone measures designed to stabilise local economies and support affected industries during the earliest stages of recovery.
Balancing national consistency with local resilience
Nationally standardised assistance packages may offer some advantages, particularly where the same event crosses state boundaries and affected communities receive different levels of support. However, Scott cautioned that consistency also raises questions about whether individual states would be expected to increase or reduce assistance to meet a national standard.
Australia’s geography, industries, communities and hazard profiles vary considerably. A standard package may improve equity across a border, but it may also limit the ability to tailor recovery programs to the circumstances of a remote community, agricultural region, metropolitan centre or geographically isolated council. The Queensland Reconstruction Authority’s position is that the detail of these national standards will determine whether they improve the system or reduce its responsiveness.
The reform of resilience funding is another major point of disagreement. The proposed model would abolish Category D betterment funding and the Disaster Recovery Funding Arrangements efficiencies program.
Queensland has used betterment funding since 2013 to rebuild damaged infrastructure to a stronger standard rather than repeatedly replacing it in the same vulnerable form. Scott said 983 betterment projects had been approved, producing almost $1 billion in avoided reconstruction costs. This calculation covers only the cost of damage avoided during subsequent events and does not include the wider social or economic benefits of infrastructure remaining operational.
Queensland has also retained $747 million through DRFA efficiencies since the mechanism was introduced in 2018. These funds are being reinvested into resilience and risk reduction activities across infrastructure, social, environmental and community sectors.
Both mechanisms would be replaced by a Resilient Infrastructure Scheme. The Commonwealth would contribute an additional 7.5 per cent of an approved project’s reconstruction cost if the state provided a matching 7.5 per cent, creating a maximum resilience allocation of 15 per cent. The funding would be restricted to infrastructure.
Scott acknowledged the importance of stronger infrastructure, but argued that resilience extends beyond physical assets. Community capacity, environmental recovery, social resilience and economic preparedness also influence how well a region withstands and recovers from disaster.
The timing of the proposed funding is equally important. An estimated reconstruction cost can take between 12 and 18 months to establish. Because the 15 per cent resilience contribution would be calculated from this estimate, councils may not know whether resilience funding is available until well after reconstruction planning has begun. Queensland’s experience with betterment shows that early funding certainty is essential, because infrastructure should be redesigned before it is rebuilt rather than reconstructed first and altered later.
The Queensland Reconstruction Authority also tested the 15 per cent cap against completed betterment projects. Its analysis found that only 1 per cent of Queensland’s previous betterment projects would have been fully funded under the proposed model. In practical terms, 99 per cent would have required additional state or council funding or could have proceeded at a reduced standard.
The future of Australia’s disaster safety net
This result is central to Queensland’s opposition. The reforms are being presented partly as a way to create a more sustainable system and increase investment in risk reduction, yet Queensland’s analysis indicates that the available resilience funding would narrow in scope, arrive later and be insufficient for almost all projects previously delivered through betterment.
Scott also presented the issue as one of national equity. The Commonwealth receives approximately 80 per cent of Australia’s taxation revenue, while states receive around 17 per cent and local governments around 3 per cent. The joint funding arrangements operate as a national safety net when disasters exceed the fiscal capacity of the affected jurisdiction.
Queensland’s analysis of data contained in the Colvin Review suggested that some states may be marginally better or worse off under the reforms during relatively low-disaster periods, while Queensland and New South Wales would be significantly worse off. One jurisdiction appeared to receive a substantial improvement. Scott cautioned that these estimates are likely to understate the effect because historical spending cannot predict the scale of future events, as demonstrated by the gap between the earlier modelled Queensland impact of $713 million reduction calculated from the most recent financial year.
The Queensland Reconstruction Authority’s argument is not that disaster funding should remain unchanged. Scott recognised the potential value of simpler administration, nationally consistent approaches and a sustainable long-term system. The authority’s concern is that the current proposal would reduce the Commonwealth’s role at the same time that disaster risk and economic costs are rising.
It would also replace a model that considers the size of each state’s economy with a broader two-tier threshold of $2.7 million for larger states and $1.6 million for smaller jurisdictions. Queensland believes this provides a less sophisticated assessment of fiscal capacity and would increase the recovery burden on the states already experiencing the greatest disaster losses.
The issue therefore extends beyond a disagreement between Queensland and the Commonwealth over funding percentages. It concerns the structure of the national disaster safety net and the level of risk that states and councils are expected to carry in the future.
Queensland is challenging the reforms at the federal level because its analysis indicates that they would remove hundreds of millions of dollars from recovery in severe years, reduce funding for resilience, delay exceptional assistance and expose councils to greater project-level financial risk. The state is also seeking greater certainty about immediate counter-disaster operations and the practical operation of nationally standardised assistance.
Other jurisdictions may experience different financial outcomes in individual years, but they would all operate under the same reduced Commonwealth safety net. As Scott observed, a state that appears marginally better off during a quiet period may face a very different position when a cyclone, flood, fire or other major event creates losses far beyond normal budget capacity.
The debate will ultimately require a careful balance between Commonwealth fiscal sustainability, state responsibility, local government capacity and the needs of disaster-affected communities. Queensland’s position is that reform should preserve the national pooling of risk, recognise the different exposure and capacity of each jurisdiction, and strengthen rather than narrow Australia’s investment in resilience.
For councils and communities, the consequences will not be measured only in government balance sheets. They will be seen in the speed at which homes can be made safe, roads and bridges restored, businesses supported and infrastructure rebuilt to withstand the next event. The Queensland Reconstruction Authority is therefore arguing that the final funding model must be assessed against the conditions it will create after a disaster, when communities have the least capacity to absorb additional cost, complexity or delay.
