Disaster recovery funding thresholds
The Australian Government is proposing changes to the way disaster recovery funding is provided to states and territories under the current Disaster Recovery Funding Arrangements (DRFA), through a proposed new Disaster Recovery Funding Framework (DRFF). (Refer to section 3 starting on page 10 of the Discussion Paper for more details.)
Key proposed changes include:
- Replacing the current Small Disaster Criterion (SDC) of $240,000 with new state and territory event-based activation trigger points (for NSW, proposed at $2.7 million per disaster event not per LGA).
- Removing the current annual state expenditure threshold system and replacing it with a single 50:50 cost-sharing arrangement between the Australian Government and state or territory governments for eligible disaster recovery costs above the relevant trigger point. Under the current arrangement the Commonwealth contributes up to 75% under various trigger conditions.
- Ensuring the activation trigger is assessed at the state or territory level, based on the total eligible costs of a disaster across all affected local government areas, rather than for individual councils.
The Australian Government's proposed changes would not directly alter council contribution requirements (this is set by the NSW Government). However, they may affect when Commonwealth funding becomes available to NSW and could therefore have indirect implications for how disaster recovery costs are shared between the Australian Government, NSW Government and councils.
Why this matters for councils
While the proposed activation trigger would apply at the NSW level rather than the individual council level, it could affect the availability of Australian Government funding for smaller disaster events.
Stakeholders have noted that:
- Historically, NSW has received significant Australian Government disaster recovery funding under the current arrangements, including for major events where Commonwealth reimbursement has reached 75 per cent of eligible costs.
- If the proposed $2.7 million event-based trigger had been in place since the 2019–20 Black Summer bushfires, an estimated 60 smaller disaster events may not have met the threshold for Australian Government funding.
- Where Australian Government funding is not available, there may be increased pressure on state and local funding sources to support recovery and restoration activities.