The federal government has signalled it wants to reduce spending on natural disaster recovery and shift its focus to reducing the risks before an event strikes.

The Greens renewed their calls for the government to take strong action against climate change while fire crews worked to contain blazes in South Australia and Victoria on Sunday.

The justice minister, Michael Keenan, did not directly respond to the climate change criticism, but said the government would speak to state and territory leaders about shifting spending from post-disaster support to upfront mitigation activities.

Keenan and his South Australian counterpart, Zoe Bettison, announced emergency grants of up to $280 per adult and $140 per child, up to a maximum of $700 per family, would be available to people affected by the Sampson Flat bushfire for essential items such as food and clothing.



He indicated the federal government wanted to overhaul future funding arrangements based on a yet-to-be released Productivity Commission report.

“I actually think we do need to look at how we are going to make sure we are spending the money we do spend on disasters in Australia in the most effective way,” Keenan said.

In April 2014 the government commissioned a review into the funding system, including Natural Disaster Relief and Recovery Arrangements (NDRRA) under which the commonwealth reimburses up to 75% of the state and territory recovery bill.

The Productivity Commission’s final report is due to be released early this year, but the draft version said the federal government contribution to mitigation was only 3% of what it spent after disasters in recent years.

Keenan said on Sunday the commission had confirmed “that we have a small amount of money being spent on mitigating the threat of a disaster and the vast majority of the money spent on dealing with the after-effects”.

“Clearly I think we need to have a conversation with the states about whether we can spend that money more effectively to mitigate the effects of a disaster before it were to occur rather than just deal with the aftermath,” he said.

Earlier, the Greens leader, Christine Milne, said the government “really must put their climate denial behind them” because such an approach was “costing the country dearly”.

“Every year, we are going to face these extreme weather events which are going to cost lives and infrastructure. Enough is enough,” Milne said.

“The Abbott government has to stop climate denial and help to get the country prepared to adapt to the more extreme conditions.”

Milne began her remarks by saying her thoughts went out to the communities currently threatened by bushfires and to the firefighters and emergency services risking their lives to save people, houses and communities.

She said the government should “look at the suffering” and commit to strong climate action.

Asked whether it was too soon to make such comments given that homes and lives remained under threat, Milne said: “It’s absolutely true that many more homes are at risk in South Australia and as I stand here it is still unclear how many homes have already been lost. It is absolutely the time to talk to Australians about the need to prepare for this.”

Milne said actions needed to prepare for extreme heat included “looking at the adequacy of our emergency services, increasing the number of firefighters, improving our health response, our emergency response”.

“We have to do these things, but if you refuse to acknowledge you have got a problem [with climate change], you don’t prepare for it and then the situation is worse,” she said.

The Productivity Commission’s draft report said natural disasters since 2009 had claimed more than 200 lives, destroyed 2,670 houses and damaged a further 7,680.

The report said increased costs of natural disasters had “mainly been driven by population growth, increased settlement in areas that are exposed to disaster risks and increased asset values” but also warned that “projections suggest that climate change could increase the frequency and intensity of some extreme weather events and potentially natural disasters”.

Over the past decade the federal government had spent around $8bn on post-disaster relief and recovery, the report said, with another $5.7bn earmarked over the four-year budget cycle. State and territory governments had spent $5.6bn on relief and recovery over the past decade.

Between 2009-10 and 2012-13, the federal government spent just $115m on mitigation work through the National Partnership Agreement on Natural Disaster Resilience.

“Current government natural disaster funding arrangements are not efficient, equitable or sustainable,” the draft report said.

“They are prone to cost shifting, ad hoc responses and short-term political opportunism. Groundhog Day anecdotes abound.”

The draft report called for states to shoulder a greater share of recovery costs and for the federal government to increase mitigation funding to the states.

It also said households and businesses should be relied on to manage disaster risks to their assets with insurance. It called for greater transparency on potential hazards, raising concern that land-use planning was “not always incorporating natural disaster risk”.