Funding to state and territory governments for community recovery should be provided as untied grants, with a transition period pending the development of a framework to assess community recovery costs. During the transition period, the Australian Government should continue to provide funding for community recovery through a reimbursement model.
Eligible community recovery expenditure during this transition period should be rationalised to counter disaster operations, personal hardship relief and community relief packages. Eligible expenditure should be limited to activities that arise as a direct consequence of a natural disaster and that:
• have widespread community benefits and would be underprovided without government support
• provide targeted longer-term assistance to people who have limited financial resources and have suffered severe losses
• provide personal and financial counselling aimed at alleviating personal hardship and distress arising as a direct result of a natural disaster
• are additional to the normal responsibilities of state, territory and local governments.

Recommendation 3