Outspoken Queensland federal cross-bencher Bob Katter has slammed a potential drought assistance package reportedly worth up to $40 million for struggling farmers and councils in his state as a hypocritical raid by Canberra on funding that should never have been stripped from local governments in the first place.

With more than half of Queensland’s councils now officially drought declared, Agriculture Minister Barnaby Joyce has been making positive noises about increasing relief funding through the potential forward payment of Financial Assistance Grants (FAGs) for local government based projects that could generate local employment as farm and town jobs dry up.

The issue of FAGs funding remains a tinderbox issue for councils after Canberra cut $925 million from the popular program by scrapping indexation based increases as a cost saving measure in last year’s Budget, a move that prompted a bitter backlash from across the local government sector.

Mr Katter said the proposal to bring forward funding that was otherwise earmarked for councils under FAGs not a win for councils which have already seen their funding slashed.

He said it was hypocritical that “in the one budget they [Canberra] stopped the indexation and now they want credit for giving this money back to the Councils, the same money they’d taken away?”

“That’s not robbing Peter to pay Paul, that’s robbing Peter to pay Peter,” Mr Katter said.

Mr Katter said the FAGs scheme “has always favoured regional and rural councils” and was provided to overcome the “lopsided funding effect where the city and the majority take all and the North West and rural councils get virtually nothing.”

“The freezing of FAG funding adds further pressure for remote councils that are already overwhelmed with the State Government adding additional responsibilities without providing extra financial assistance,” Mr Katter said.

A major issue for Queensland councils and the agribusiness sector is that while other forms of weather related incidents can trigger state and federal disaster relief funding, drought does not even though local economies can suffer similar financial impacts.

Even when disaster funding does flow, conditions on spending can often mean that subcontractors are used to perform work rather than local resources being deployed, a major irritant in communities where normal jobs and businesses are disrupted by incidents.

Mr Katter accused the federal government of pettiness over the FAGs funding in Queensland.

“Taking away about $100 million in FAG grants in the one year and the hypocrisy in giving back $20 million in self-help projects in the next year, well you wonder why people don’t like politicians,” Mr Katter said.