Current government funding for natural disasters is inadequate and prone to short-term political opportunism, according to a new report by the Australian Productivity Commission.

The Natural Disaster Funding Arrangements report alleges governments over-invest in natural disaster recovery and reconstruction, but are inadequately preparing for natural disasters.

• Flood warnings for Tasmania
• Flash-flooding causes chaos as storms drench south-east Queensland

Commissioner Jonathan Coppel said the current funding model discouraged states from preparing for disasters like flooding because the federal government paid for disaster recovery bills.

“The funding arrangements overwhelmingly tip the balance away from planning for and mitigating against natural disasters and towards waiting for expenditure to rebuild destroyed assets” Mr Coppel said.

State governments need to shoulder a greater share of natural disaster reconstruction costs so they have a bigger incentive to manage natural disaster risks such as flooding and bushfires, the report says.