A FRESH funding stoush has erupted between the Queensland and Federal governments over a refusal to pay out $725 million in flood relief.
Queensland Treasurer Tim Nicholls told Parliament on Thursday morning the Gillard Government was refusing to reimburse the state to the tune of $725 million it paid out in local government grants and hardship payments.
But Federal Treasury says the money was paid in advance to the Newman Government in 2012 because of the 2011 flood disaster's gravity.
"The Queensland Government, in good faith, has spent money with local authorities and given money to those people who have been affected by the floods and complied with the requirements to make sure people who have been affected by the events that have occurred have the opportunity to recover," Mr Nicholls said.
"The payments that we talk about are $725 million that Wayne Swan is now refusing to reimburse to the Queensland Government.
"Wayne Swan is refusing to pay Queenslanders money even though it is allocated in his forward estimates."
The Queensland Government believes the funds are being withheld because certain projects funded with the flood relief have not been verified with audit requirements.
Mr Nicholls said to expect councils with thousands of kilometres of roads to have pre-flood photos of every "culvert, causeway and street sign was ludicrous".
"This appears to be a triumph of bureaucracy over outcome," he said.
But a spokesman for Federal Treasurer Wayne Swan confirmed this morning the money was paid to Queensland in May 2012.
"Advance payments were made by the Commonwealth to assist Queensland with cashflow and make sure that reconstruction works were done as quickly as possible," the spokesman said.
"This was highly unusual but the Commonwealth agreed to make early payments because of the magnitude of the disaster, with the undertaking that the Queensland Government would provide proper evidence following reconstruction.
"The issue is that Queensland's Auditor-General has refused to endorse Mr Nicholls' claims that the money was spent on reconstruction efforts.
"By law the Auditor General is required to tick this off."
Mr Nicholls said the funds were paid into a trust fund the government couldn't access.
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