Government told to overhaul disaster funding for regions

THE existing arrangements for the Federal Government to help fund recovery from natural disasters in regional Australia should be abolished, the Abbott Government has been told.

In recommendations from the Commission of Audit released late last week, the abolition of the Natural Disaster Relief and Recovery Arrangements (NDRRA) was proposed.

While Treasurer Joe Hockey said he would not be commenting on specific recommendations from the audit, the proposal could mean state governments would have to go to Canberra begging for money to recover from future disasters.

The audit report has recommended abolishing the arrangements, due to the significant impact of "major flooding events that occurred in 2010-11 and the following two years, particularly in Queensland".

"Over this period the Commonwealth has contributed $5.8 billion toward state and territory disaster reconstruction costs and further contributions of $5.8 billion are incorporated in the forward estimates," the report reads.

"This large and volatile expenditure poses significant and ongoing risks to the budget."

The funding arrangements were put in place to ensure local councils and state governments got a fair share of Commonwealth funding to recover from natural disasters, in line with an economic formula.

But the audit commission said the Federal Government's role in the recovery was duplicating state responsibilities, instead recommending a grants system replace the NDRRA.

"The level of Commonwealth contribution would vary depending on the size and severity of the disaster event, but could be set at between 25% and 33% of likely reconstruction costs," the report reads.

The report also recommended abolishing the current disaster recovery allowance for those affected, and replacing it with direct funding "to only those individuals severely affected by natural disasters".