Federal Government Drops Proposed 50:50 Disaster Recovery Funding Model

The Australian Government will retain the core structure of existing disaster recovery funding arrangements with New South Wales, abandoning a proposal that would have moved future disaster recovery costs towards an equal 50:50 Commonwealth–state funding model.

The decision means the existing Disaster Recovery Funding Arrangements (DRFA) will remain substantially unchanged, with the Commonwealth able to reimburse states and territories for up to 75 per cent of eligible disaster assistance in some circumstances.

Proposed 50:50 Model Dropped

In June 2026, the Commonwealth proposed replacing the existing DRFA with a new Disaster Recovery Funding Framework.

That model was intended to introduce more standardised assistance packages, simplify access to disaster funding and establish a 50:50 funding partnership between the Commonwealth and states and territories.

Following consultation with state governments, councils and other stakeholders, the Commonwealth confirmed on 9 October 2026 that it would no longer proceed with the proposed 50:50 cost-sharing model.

Federal Treasurer Jim Chalmers said the decision was intended to provide greater funding certainty when disasters occur, while Emergency Management Minister Kristy McBain said consultation had highlighted the different needs of communities across Australia.

How the Current DRFA Works

The existing DRFA is a cost-sharing arrangement between the Australian Government and state and territory governments.

Once activated for an eligible disaster, assistance can cover measures including:

• Emergency assistance for affected individuals
• Clean-up and counter-disaster operations
• Restoration of essential public assets
• Concessional loans and grants for eligible businesses, primary producers and not-for-profit organisations
• Additional recovery packages where agreed between governments.

Under the framework, the Commonwealth may reimburse states and territories for up to 75 per cent of eligible assistance expenditure.

However, this should not be interpreted as a universal 75:25 split for every disaster program. Individual recovery measures can have different funding arrangements — including 50:50 jointly funded programs — depending on the category of assistance and agreements reached between governments.

NSW Welcomes Retention of Existing Model

The NSW Government said retaining the core funding arrangements would provide greater certainty for communities, councils and agencies planning future disaster recovery work.

The NSW Reconstruction Authority coordinates DRFA-funded recovery in the state, working with councils, NSW agencies and other delivery partners on rebuilding infrastructure and supporting affected communities.

Examples of assistance previously delivered under the DRFA include funding to restore damaged roads and public infrastructure, hardship assistance for residents, and recovery grants of up to $75,000 for eligible primary producers following major weather events.

Reform Work Expected to Continue

The decision does not mean broader disaster funding reform has ended.

The Commonwealth’s earlier reform process followed the Independent Review of Commonwealth Disaster Funding, led by Andrew Colvin, which identified concerns about the complexity, speed and administrative burden of the current system.

The federal government has previously proposed simpler eligibility rules, more standardised assistance and increased emphasis on disaster resilience and infrastructure betterment.

Those areas may continue to be considered even though the proposed 50:50 funding model has been dropped.

For NSW, the immediate effect is that the central cost-sharing structure used for disaster response and recovery will remain in place rather than being replaced by the proposed equal Commonwealth–state funding model.