The Australian Parliament has approved the Commonwealth Government's Flood and Cyclone Levy Bill, which has earmarked some $5.6 billion in funds for the reconstruction of severely damaged townships.

In a joint statement, Prime Minister Julia Gillard, Attorney-General Robert McClelland and Minister Assisting the Attorney-General on Queensland Floods Recovery Joe Ludwig today welcomed the passage of the bill, which both houses of Parliament have approved.

The said legislation would allow funding for disaster-affected communities who face the task of rebuilding local roads, rail lines, bridges, and schools.

Assistance will be delivered to Queensland through the Queensland Reconstruction Authority, which will coordinate the total statewide rebuilding program.

Payments to other states will be made through the Natural Disaster Relief and Recovery Arrangements (NDRRA).

Yesterday, the Attorney-General moved to strengthen the NDRRA guidelines for future disasters by issuing new guidelines to help ensure State and Territory Governments have adequate capital or insurance to fund the rebuilding of essential public infrastructure.

States and Territories have a responsibility to taxpayers to put in place cost effective insurance arrangements - for example, through commercial insurance and reinsurance or other mechanisms such as self-insurance.

Under the new arrangements tabled in Parliament, States and Territories will not be eligible to receive the maximum level of Commonwealth support unless they undergo regular assessments of their insurance arrangements by an independent specialist such as the state Auditor-General.