Disaster funding retained in major win for councils and communities

NSW councils have made progress in their fight to ensure their communities are not left financially worse off in the wake of natural disasters. NSW councils have been advised the federal government has abandoned proposed changes to the national disaster funding system following a strong advocacy campaign by Local Government NSW (LGNSW) and local government organisations across the country. There had been genuine concern that any reduction in Commonwealth funding could ultimately have shifted costs onto local government and ratepayers. The announcement follows a coordinated campaign opposing reforms proposed by the National Emergency Management Agency (NEMA). LGNSW lobbied on behalf of councils, arguing the changes would place unsustainable pressure on communities already recovering from increasingly frequent natural disasters. LGNSW president and Inner West mayor, Cr Darcy Byrne, described the decision as a major win for councils, particularly those in rural, regional and remote areas facing significant financial challenges. “The Australian government has made sensible changes that recognise the scale and urgency of the disaster recovery challenge facing local communities,” Cr Byrne said. “Councils are on the frontline before, during and after disasters. They are often the first to respond and the last to leave. They should not be left carrying millions of dollars in recovery costs for months or years afterwards.” LGNSW particularly welcomed the government’s decision to retain the current cost-sharing arrangement, under which the Commonwealth contributes up to 75 per cent of eligible recovery costs. Under the proposed reforms, the federal contribution would have been reduced to a 50:50 funding model, while the threshold for activating Commonwealth assistance would have increased to $2.7 million. Analysis conducted by LGNSW, based on NSW Reconstruction Authority modelling, found NSW councils would collectively have lost more than $800 million in Commonwealth disaster recovery funding if the proposed changes had been applied between 2019-20 and 2024-25. Cr Byrne said retaining the 75 per cent contribution would provide councils with greater certainty as they re-build roads, bridges and other essential infrastructure. “Keeping the Commonwealth contribution at 75 per cent gives councils greater certainty to repair essential public assets and restore local services without disaster costs threatening their financial viability or being unfairly shifted onto ratepayers,” he said. The federal government has indicated it will review disaster funding activation thresholds. Cr Byrne said LGNSW looked forward to working with both the Australian and NSW governments on the details to ensure councils receive adequate support as natural disasters become more frequent and severe. He also said future reforms should focus on creating a fairer and more efficient recovery system, including faster assessment and payment processes and stronger support for building more resilient infrastructure. A spokesperson for Minister for Emergency Management, Kristy McBain, said the decision to retain the current 75:25 disaster recovery funding arrangement followed extensive consultation with disaster-affected communities. “The proposed 50:50 cost-sharing arrangement was intended to re-balance responsibilities between the Australian government and state and territory governments,” the spokesperson said. “In response to feedback, the government will change activation thresholds to ensure they are effective and equitable in supporting the recovery needs of each state, territory and local government area. “They will mean councils can get the funding they need to support communities faster and with less red tape.” The government is continuing consultations with states, territories and local governments on the proposed Disaster Recovery Funding Framework, including through a Local Government Working Group established by Minister McBain. The spokesperson confirmed there would be no changes to disaster recovery funding arrangements during the current high-risk weather season. “Proposed changes will not come into effect until further work has been undertaken with states, territories, local governments and communities to ensure any new arrangements are practical and effective,” the spokesperson said.