January 2014
Natural disaster financial assistance for local councils
Advice regarding the replacement of essential public assets including betterment
and enhancement
AS OF 20 DECEMBER 2013, THE CONSIDERATION OF ANY BETTERMENT PROPOSALS BY THE COMMONWEALTH
HAS BEEN PLACED ON HOLD PENDING THE FINDINGS OF THE PRODUCTIVITY COMMSION INQUIRY INTO
NATIONAL DISASTER FUNDING ARRANGEMENTS (EXPECTED IN NOVEMBER 2014).
Restoration or Replacement of Essential Public Assets
As a basic principle, the restoration or replacement of certain essential public assets damaged as a direct result of
a natural disaster should be designed to provide the most cost effective solution that complies with relevant
Australian building, design and engineering standards.
Where this requires different materials or technology than the pre-existing assets, for example replacing a timber
bridge with a concrete and steel bridge, this work will be eligible for reimbursement funding on a 50:50 basis
between the Commonwealth and Victorian Government.
Betterment
Cost sharing for upgrading essential public assets to more resilient standards is also available and is known as
betterment.
Betterment of an essential public asset was introduced to the Natural Disaster Relief and Recovery Arrangements
(NDRRA) in 2007 to reduce recovery and rebuilding costs and encourage increased disaster-resilience in essential
public assets. The betterment provision allows State and Territory (State) governments to restore or replace
essential public assets to a more disaster resilient standard than their pre-disaster standard. The intent of
betterment is to increase the resilience of Australian communities to natural disasters, while at the same time
reducing future expenditure on asset restoration, reducing incidents, injuries and fatalities during and after
natural disasters, and improving asset utility during and after natural disasters1.
What assets can be included in a Betterment Application?
Under the NDRRA, an essential public asset has been defined as “an asset of an eligible undertaking that the state
considers and the Commonwealth agrees:
a) is an integral and necessary part of the state’s infrastructure which is associated with health, education,
transport, justice or welfare; and
b) would, if lost or damaged, severely disrupt the normal functioning of a community; and
c) would, if lost or damaged, be restored or replaced as a matter of urgency.
Examples of essential infrastructure are roads and bridges, culverts and storm water infrastructure.
An example of a project that might be considered for betterment funding is where the level of a flood-affected
highway may potentially be raised for several kilometres, which would be result in increasing the asset to a more
disaster resilient standard.
1
Guideline 7 Commonwealth NDRRA Determination 2012
What costs are able to be included in a Betterment Application?
Betterment costs mean the difference between the cost of restoring or replacing an essential public asset to its
pre-disaster standard, and the cost of restoring or replacing the asset to a more disaster-resilient standard.
The normal cost of restoration will be claimable under Category B of the NDRRA and the marginal cost of
betterment will be claimed under Betterment.
For example, if a proposal is developed for an asset with a restoration option costed at $2 million and a
betterment option costed at $5 million, the betterment component would be $3 million.
All costs directly associated with a betterment project, including the cost of designing and analysing the
betterment component of the project, are regarded as eligible expenditure, subject to approval of the
Betterment proposal by the Commonwealth and State Governments before any betterment works are
commenced.
Enhancement of assets
Where there has been an increase in functionality, capacity or aesthetics of an asset beyond that which existed
prior to the emergency, this will be considered as enhancement rather than betterment (for example, additional
lanes on a bridge) as it is will not result in increasing the asset to a more disaster resilient standard. Enhancement
is not eligible for reimbursement under the NDRRA and as such, costs associated with the enhancement
component would need to be paid by the relevant authority responsible for the asset.
If an additional lane was added to the flood-affected highway example above, beyond what it had previously
before the floods, only the original lanes would be eligible for NDRRA reimbursement. The additional lane would
be considered to be improved ‘functionality’ and enhancing capacity rather than increasing the asset to a more
disaster resilient standard. Costs associated with the original lanes would need to be kept separate from the
improved ‘functional’ component in order to seek reimbursement. Costs associated with the enhancement of the
asset would need to be paid by the relevant authority responsible for the asset as they are not eligible for
reimbursement under the NDRRA.
Pre-approval requirement for betterment projects from Commonwealth Government
The Victorian Government must obtain pre-approval from the Commonwealth Government before the
betterment works are commenced following submission of a Betterment Application and cost-benefit analysis
justifying the betterment project.
Applications for betterment must be completed using the Betterment Application Template. This is to be
submitted to DTF for review and consideration prior to being submitted for approval under the Victorian
Government Cabinet Budget and Expenditure Review Committee. If endorsed by the Victorian Government, the
submission will be forwarded to the Commonwealth for assessment.
Approved betterment works will be shared on a one-third State Government, one-third Commonwealth
Government and one-third Local Government basis if the asset is owned by local government, or on a 50:50 basis
between the Commonwealth and State Government, if the asset is owned by the State.
Applications and business cases including a cost-benefit analysis are to be provided to:
Donna Kennedy Analyst, Department of Treasury and Finance (03) 9651 0344
The following link provides access to NDFA guidelines and forms to assist councils with their claims:
http://www.dtf.vic.gov.au/Victorias-Economy/Natural-disaster-financial-assistance
NDFA Summary Guidelines for Council;
NDFA Claims Reimbursement Process - Frequently Asked Questions (FAQ);
Advice regarding eligibility of salaries and wages; and
NDFA Council Claim Form.
Frequently asked questions
Q: Can betterment costs be included in a claim?
A: The reinstatement or replacement of assets should be designed to provide the most cost effective solution that
complies with relevant Australian building, design and engineering standards. Where this requires different
materials or technology than the pre-existing assets, for example replacing a timber bridge with a concrete and
steel bridge, this work may be eligible for reimbursement funding on a 50:50 basis between the Commonwealth
and Victorian Government.
The NDRRA Determination defines betterment as the replacement or restoration of an essential public asset to a
more disaster resilient standard than its pre-disaster standard.
All costs directly associated with a betterment project, including the cost of designing and analysing the
betterment component of the project are regarded as eligible expenditure.
Essential damaged public assets refers to assets identified as being an integral and necessary part of the state’s
infrastructure which is associated with health, education, transport, justice or welfare; and would, if lost or
damaged, severely disrupt the normal functioning of a community; and would, if lost or damaged, be restored or
replaced as a matter of urgency. Examples of essential infrastructure are roads and bridges, culverts and storm
water infrastructure.
An example of a project that might be considered for betterment funding is where the level of a flood-affected
highway may potentially be raised for several kilometres, which would be result in increasing the asset to a more
disaster resilient standard.
Q: What does the State Government or councils need to do if they wish to seek reimbursement from
the Commonwealth under NDRRA for betterment projects?
If the State Government wishes to seek reimbursement from the Commonwealth for betterment projects, it must
obtain pre-approval from the Commonwealth in accordance with the NDRRA before the betterment works are
commenced.
Applications for betterment must be completed using the Betterment Application Template and provided to
Donna Kennedy at the Department of Treasury and Finance on (03) 9651 0344.
Any additional upgrading costs related to the betterment works would be shared on a one-third State
Government, one-third Commonwealth Government and one-third Local Government basis if the asset is owned
by local government, or on a 50:50 basis between the Commonwealth and State Government, if the asset is
owned by the State.
Q: Are councils able to claim the costs of an additional lane when repairing damage to a road under
the Natural Disaster Financial Assistance (NDFA)?
A: Costs associated with adding another lane to a disaster-affected road beyond what it had previously before the
event, would not be eligible for reimbursement under NDRRA. The additional lane would be considered to be
improved ‘functionality’ and enhancing capacity rather than increasing the asset to a more disaster resilient
standard.
Costs associated with the original lanes would need to be kept separate from the improved ‘functional’
component in order to seek reimbursement. Costs associated with the enhancement of the asset would need to
be paid by the relevant authority responsible for the asset.
Q: Are councils able to claim the costs of an additional culvert when repairing damage to a road under
the NDFA?
A: Costs associated with providing an additional culvert when repairing a road damaged from a natural disaster,
or re-locating a particular road to an alternative location would be eligible for NDRRA reimbursement subject to
the approval of the betterment project by the Commonwealth, as these activities would be considered to be
increasing the asset to a more disaster resilient standard. There are no standards or guidelines on the number
and/or size of culverts that the State must adhere to, as long as the increase in resilience and a net benefit can be
demonstrated.
If the State Government wishes to seek reimbursement from the Commonwealth for betterment projects, it must
obtain pre-approval from the Commonwealth in accordance with NDRRA before the betterment works
commences including a cost-benefit analysis justifying the betterment project.
Reimbursement would be made on a one-third State Government, one-third Commonwealth Government and
one-third Local Government basis if the highway is owned by local government, or on a 50:50 basis between the
Commonwealth and State Government if the asset is owned by the State.
Q: Are councils able to claim the costs of replacing a timber bridge with a concrete and steel bridge
when repairing damage under the NDFA?
A: The replacement of a damaged asset should be designed to provide the most cost effective solution that
complies with relevant Australian building, design and engineering standards. Where this requires different
materials or technology than the pre-existing assets, for example replacing a timber bridge with a concrete and
steel bridge, this work will be eligible for reimbursement funding on a 50:50 basis between the Commonwealth
and Victorian Government.