More than 500 councils are set to vote on a City of Sydney-led motion to set up a fund earmarked for climate change-fuelled damage supported by levies or taxes on oil, coal and gas companies, which are key contributors of greenhouse gas emissions.
Councils face mounting costs to repair and maintain roads, drainage, parks and coastal defences under global temperature rise that are well outpacing revenue growth.
Local governments backing the motion argue a dedicated funding stream for recovery and resilience would lighten reliance on hikes on ratepayers.
The Sunshine Coast Council, a low-lying coastal region particularly vulnerable to floods and erosion, has earmarked $1.7 million for disaster management and resilience in its latest budget and flagged a 9.7 per cent rate increase.
Sunshine Coast councillor David Law said the local government supported a compensation fund as a fair and practical solution to climate damage bills.
"By requiring major coal and gas corporations to contribute to the costs of climate damage, it would give councils access to a dedicated funding stream for recovery and resilience, and reduce the need for ongoing rate increases," Cr Law said.
Councils are responsible for maintaining nearly half a trillion dollars worth of infrastructure, including 75 per cent of the the nation's roads.
Insured losses from natural catastrophes - a useful but imperfect measure of the damage toll - are 12 times higher than they were two decades ago, compared with government revenue that has grown by three times in the same period, according to The Australia Institute.
Councils receive some financial support from state and federal governments after disasters but these handouts fall well short of what is needed to manage climate costs sustainably, proponents say.
City of Sydney deputy lord mayor Jess Miller said the federal government's national adaptation plan, released in 2025, created a mandate for councils to manage resilience on top of frontline responses already provided.
"But the government has failed to provide the funds necessary to deliver these critical services," she said.
Councils are scheduled to vote on the motion at the Australian Local Government Association national general assembly on Wednesday.
Prime Minister Anthony Albanese is due to address the local government gathering on Thursday.
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