A City of Sydney-led motion to set up a climate compensation fund has been formally adopted unopposed as an Australian Local Government Association position.
It calls on the federal government to explore pathways for coal, oil and gas corporations to help fund disaster relief, mitigation and adaptation.
Councils face mounting costs to repair and maintain roads, drainage, parks and coastal defences under global temperature rise that are well outpacing revenue growth.
City of Sydney deputy lord mayor Jess Miller said climate change was imposing huge costs on councils, with some coastal local governments spending millions moving sand around to protect homes and assets.
But councils have limited ability to raise funds.
"We can increase rates, if the state government will let us in NSW, or we shift those costs on to residents, or we go without," she told AAP.Â
"Climate change is impacting all of us, and it's costing us so much."
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.
The motion at the ALGA's general assembly in Canberra also called on the federal government to establish a parliamentary inquiry into the adequacy of the national adaptation plan, which was released in 2025.
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