Disaster Recovery Funding Arrangements (DRFA)

The Disaster Recovery Funding Arrangements 2018 (DRFA) is the means through which the Australian Government provides funding to states and territories to share the financial burden of responding to a natural disaster, and supports the provision of urgent financial assistance to disaster affected communities.

The DRFA is a cost-sharing arrangement between the Commonwealth and the states and territories in accordance with basic principles for assistance. State and territory governments are best placed to identify the type and level of assistance to make available to their communities following a disaster, in accordance with their responsibility for disaster and emergency management. Disaster recovery funding assistance is delivered through state and territory agencies (ACT, NSW, NT, Qld, SA, Tas, Vic and WA).

Under the DRFA, four categories of assistance measures can be activated by a state or territory seeking support from the Australian Government. Once the DRFA is activated, the Australian Government may reimburse states and territories up to 75 per cent of the financial assistance provided.

This contribution may be delivered through a number of eligible assistance measures including:

personal hardship and distress assistance
the engagement of a Community Recovery Officer to work with individuals and families experiencing personal hardship and distress
counter disaster operations
concessional loans or interest subsidies for small businesses and primary producers
transport freight subsidies for primary producers
loans and grants to voluntary non-profit organisations and individuals in need
the reconstruction of essential public assets
community recovery funds
clean-up and recovery grants

DRFA cost-sharing arrangement

Responding to natural disasters, including the provision of relief and recovery assistance to disaster affected communities, is primarily the responsibility of state and territory governments.

The DRFA allows state and territory governments to activate certain relief and recovery assistance immediately following a disaster without seeking approval from the Australian Government. Under these arrangements, the states and territories determine the type and level of assistance to make available. Importantly jurisdictions are not bound by the assistance available under the DRFA. That is, states and territories can make available whatever assistance is considered necessary, regardless of whether it is eligible for cost sharing under the DRFA.

Basic principles for DRFA assistance

The DRFA operates in accordance with the following principles:

DRFA assistance is intended as an emergency helping hand for those in need. It does not provide compensation for losses or restore lifestyles to their pre-disaster standard.
DRFA assistance is not intended to replace the need for appropriate self-help strategies, such as acquiring insurance or undertaking appropriate disaster mitigation.
In accordance with their responsibilities, the states and local governments should draw on their own resources to provide disaster assistance before seeking support from the Australian Government through the DRFA.
DRFA assistance should be used to complement and promote disaster resilience outcomes for affected individuals and communities.
As far as practicable, DRFA assistance should achieve an efficient allocation of resources. In particular, the financial exposure borne to taxpayers, by all levels of government, under the DRFA should be minimised.

DRFA assistance measures

Category A: assistance to individuals to alleviate personal hardship or distress arising as a direct result of a disaster. Category A assistance is provided to impacted communities and individuals automatically by the states, without requiring prior approval from the Australian Government.
Category B: assistance to the state, and/or local governments for the restoration of essential public assets and certain counter-disaster operations. Category B assistance also covers assistance to small businesses, primary producers, not-for-profit organisations and needy individuals through concessional loans, subsidies or grants. Category B assistance is provided automatically by the states and territories without requiring approval from the Australian Government.
Category C: assistance for severely affected communities, regions or sectors and includes clean-up and recovery grants for small businesses and primary producers and/or the establishment of a Community Recovery Fund. Category C assistance is only made available when the impact of a disaster is severe. It is intended to be in addition to assistance under Categories A and B and is usually considered once the impacts of the disaster on affected communities have been assessed. Category C assistance must be requested by the states and territories and requires agreement from the Prime Minister.
Category D: exceptional circumstances assistance beyond Categories A, B and C. Category D assistance is generally considered once the impact of the disaster has been assessed and specific recovery gaps identified. Category D assistance must be requested by the states and territories and requires agreement from the Prime Minister. Category D assistance is generally cost-shared equally by the Australian and state or territory government.

DRFA financial assistance

Under the DRFA, the Australian Government provides financial assistance of up to 75 per cent to the states and territories for eligible expenditure on relief and recovery assistance. Funding can either be provided in the form of a financial reimbursement or as an advance payment. Advance payments are generally only made where exceptional circumstances exist in response to significant and extremely damaging natural disasters, where the cost is likely to be greater than the state can manage in the immediate to short-term.

The level of financial assistance provided by the Australian Government to jurisdictions under the DRFA depends on the type of assistance provided and the level of expenditure incurred by a state or territory within a financial year. In this way, the DRFA operates as a financial safety-net when frequent and/or severe natural disasters occur. As the cost of providing assistance to disaster affected communities increases, so too does the level of financial support from the Australian Government to the states and territories.

In order to calculate the level of financial support, expenditure thresholds are used, which take into account the capacity of individual states to fund relief and recovery assistance.

Improving disaster recovery in Australia

The Disaster Recovery Funding Arrangements (DRFA) Review is addressing recommendations by the Royal Commission into National Natural Disaster Arrangements.

The Australian Government is working collaboratively with each state and territory to improve the DRFA to ensure all Australians impacted by disasters can access equitable support and are treated more consistently and fairly, regardless of where they live.

Disaster Recovery Funding Arrangements (DRFA)

Find disaster recovery services and support