A response to the 2026/2027 Federal Budget by Act on Climate Collective Members August Wylynko and Kelly Bebendorf.
Relief, Resilience and Who Pays
'Preparedness’, ‘security,’ ‘sovereignty’, and ‘resilience’ define the 2026/27 Government’s response to the fuel, housing, cost of living, and national security crises, however, this year’s budget fails to invest in true resilience to the climate crisis and funds unsustainable, reactive short-term mechanisms. We are disappointed to see the government shift the social and financial burden of the risk of climate impacts onto communities.
The Disaster Ready Fund (DRF)
The DRF is the Government’s primary mechanism for funding disaster resilience and risk reduction. Established in 2023, under an investment framework (the target of these investments remains a mystery), the DRF holds more than $5 billion in capital and has a 7.8% return p.a. Yet, annual withdrawals from the Fund have remained capped at only $200 million. This financial year, the amount withdrawn has been reduced to $142 million and represents less than 0.025% of total Budget expenditure. This current withdrawal cap threatens to underinvest in risk reduction and does not account for the increasing costs of construction, infrastructure, and other forms of building which we need for a climate resilient future. This will inevitably reduce the government's purchasing power over time. Federal Government spending should match real returns, and provide the potential to temporarily withdraw more money from the Fund than the interest it gathers. This is essential as climate risks in Australia escalate each year. The structure of the DRF is economically short sighted because every dollar invested in adaptation and resilience would in fact generate significant Government saving. Spending on adaptation now is a crucial preventative investment.
There is a dangerous contradiction at the centre of the Government’s resilience agenda: by prioritising investment returns over disaster risk reduction spending, the Government is ignoring evidence showing that upfront investment reduces long term recovery costs. This lack of foresight is also an intergenerational equity problem and fails to ensure that future generations have adequate infrastructure, ongoing resources and access to a healthy environment. Spending on climate adaptation and disaster preparedness must be a priority now. The DRF should not be maintained for the sake of “returns”; Australia is already experiencing the impacts of the climate crisis, we need a Fund that is built on long-term considerations and sustaining community resilience.
The DRF needs to be spent on mechanisms that reflect contemporary evidence on the most effective disaster resilience and risk reduction practices. As we know, place based adaptation that is founded in local knowledge is the most sustainable in the long-term and most likely to avoid mal-adaptation. Current funding from the DRF is limited and prioritises built infrastructure, ignoring generational knowledge and the wealth of response potential within communities. Many locally-led adaptation and capacity strengthening projects remain underfunded, with communities continuing to rely on un-satisfying, competitive grant processes. This disadvantages smaller councils, regional communities and community-led organisations.
Disaster Recovery Spending
The Government continues to increase spending on disaster response and recovery, with relief funding expected to rise to $6.8 billion for the 26/27 from $5.6 billion in the 25/26 period (Budget Paper no.3).
The Federal Government has a track record of prioritising recovery spending, which continues to increase, while resilience spending remains stagnant in comparison. This reflects a broader structural problem that is consistent across Governmental departments. The current funding system socialises the costs of climate disasters while privatising the profits of fossil fuel extraction. This means communities end up paying twice - once through taxes to fund recovery and again through the social, economic and cultural impacts of climate disasters.
If resilience is to be treated as more than political rhetoric or campaign tactics, the Government must significantly increase the amount of funding for risk reduction and establish a Polluters Pay Compensation Fund that ensures polluting industries that are causing the most climate impact absorb the costs of adaptation and resilience.
A Polluters Pay Levy for Disaster Risk Reduction
Despite rising public and political demand for a gas export tax, there are no new mechanisms in this year’s budget that require major polluters to pay up. Fossil fuel companies continue to profit from diesel tax rebates, and avoid paying their fair share.
To support the Government’s Risk Reduction Framework, including the ‘enhanced investment’ priority, Australia should introduce a Polluters Pay Levy that directly funds risk reduction. This would not just fund emergency services preparedness but invest in long-term risk reduction through community resilience, adaptation and strong mitigation measures. A levy can hold polluters accountable for being the primary contributors to the escalating climate crisis.
Tipping Point’s Polluters Pay Compensation Fund
The proposed Polluters Pay Compensation Fund, designed by Tipping Point is a levy that we believe should be imposed in addition to the Disaster Ready Fund. This Fund would not only require major polluters to pay for recovery but also long term resilience, adaptation and vulnerability reduction projects and programs.
The Polluters Pay Compensation Fund would re-distribute the burden, responsibility and accountability of climate risks onto the industries that contribute the most. This would help account for externalities, reduce future liabilities, protect essential public finance and provide necessary insurance relief.
The Government’s Preparedness for War, not Climate
The 2026/27 Federal Budget repeatedly frames defence spending through the language of ‘preparedness’ and ‘resilience’, committing to an additional $53 billion in defence spending over the next decade, including $130 billion for undersea warfare capabilities and billions more for autonomous defence systems. This, they state, is necessary for a ‘resilient and secure Australia’.
If climate risk is recognised as the national security concern that it is, then resilience funding for disasters should be treated in much the same way. The Government must invest now to reduce future harm, strengthen national safety and empower communities. If we are so concerned with protecting so-called ‘Australia’ and ‘Australians’, why are we not protecting the people and the environment that need it the most?
Climate disasters are already happening and will continue to get worse if we don’t implement risk reduction funding now. Impacts are felt across Australia by people, healthcare systems, and insurance and housing prices. The climate emergency impacts everyone. But not equally. It must be treated with the same scale and urgency as the potential for war. In fact, it must be treated imminently since we are already experiencing severe climate impacts.
As we have seen, disaster recovery spending is becoming structurally unsustainable. The Disaster Ready Fund is a short-term solution to a long-term problem, its current structure is conservative and short sighted with respect to the scale of the impacts of current climate disasters. We need to go beyond the DRF, we need a levy such as the Polluters Pay Compensation Fund that funds resilience, adaptation and long-term, impactful, risk reduction.
Once again, the question is not whether the Australian Government can afford to invest more in preparedness, but how can it afford not to?
Act on Climate is a collective of Friends of the Earth Melbourne focused on climate adaptation. We campaign for climate justice and organise for locally led adaptation initiatives. Much of what we do builds community capacity for climate resilience. The work of our collective and many other grassroots initiatives across Australia is deeply impacted by Federal Government funding. True climate resilience requires long-term infrastructure and capacity strengthening within communities. Unfortunately, this year's federal budget fails to invest in long-term preparedness and security for the climate crisis.
This article is an opinion piece by Collective members and does not reflect the official opinions of Friends of the Earth Australia.
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