$4 billion disaster fund earns $700m in interest, but not a cent handed out

Labor Senator Murray Watts grilled officials from the National Recovery and Resilience Agency at senate estimates about why the Emergency Response Fund, which has grown to $4.7b, was yet to be used.

"This fund is nearly two years old, it's earnt the government over $700 million in interest and not a cent has left the Commonwealth for recovery or mitigation processes," Senator Watt said.

NRRA deputy chief executive Nico Padovan said the money, of which $150 million was available annually for natural disaster relief, was a "fund of last resort".

"Given other measures in place, at this point there has been no need identified to call upon that fund," Mr Padovan said.

"It's a future fund, so it's the interest earnt off that fund that is available for expenditure."

Emergency Management Minister Bridget McKenzie said the money was set aside for "funding into the future" and reserved for catastrophic disasters, when existing support programs were insufficient.

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She pointed out the Commonwealth had recently poured money into bushfire recovery programs, often in partnership with the states.

"So we haven't had to use this particular fund, we've used other methods to fund and support recovery and response to natural disasters," Senator McKenzie said.

However, Senator Watt said the eligibility criteria for the fund, which Labor voted in favour for, was very broad.

"The ERF could have been used to build cyclone shelters, evacuation centres, fire breaks and flood levees right across Australia," he said.

"It's really disturbing that we still get reports of people living in caravans and temporary accommodation.

"But once again, we approach another disaster season with nothing built, no jobs created and no communities protected. We can only hope this latest failure doesn't have a disastrous effect on vulnerable communities this disaster season."

Only $50 million from the fund has been committed, which will go towards 22 flood mitigation projects.

Mr Padovan said the money would soon be released, following the project sign off with the state and territory governments.

But Senator Watt said even if some of the projects were funded soon, NRRA officials conceded there's little to no chance they would be completed before the flood season hits in coming months.

"This will be the third consecutive disaster season that the ERF has not been used to keep Australians safe," he said.