The 2014-15 Queensland claim includes flood and cyclone recovery works from Bundaberg from category five Cyclone Oswald and repairs to Brisbane's river ferry terminals.

"Michael. This politicisation of disaster recovery funding is unprecedented and disgraceful," Queensland's deputy premier Jackie Trad personally wrote at the bottom of a formal letter to Mr Keenan.

"You didn't even have the professional courtesy or respect for Queensland to advise us directly, we found out about it through your budget."

"I can assure you the Palaszczuk Government has no intention of sitting by silently while the Turnbull Government dishonours its agreement with the people of Queensland to reimburse communities who have been rebuilt after being devastated by natural disasters."

The Queensland Government has paid for 2014-15 Cyclone Oswald recovery works and is waiting to be repaid around 75 per cent of the cost by the federal government.

The comments are sure to be raised by the Queensland Government with Mr Turnbull when he returns to campaign in Queensland during the 2016 federal election.

Queensland Treasurer Curtis Pitt picked up the federal government's decision to delay the $1.2 billion payment to Queensland after the federal budget on May 3.

Mr Pitt said the federal government decision potentially put a "billion dollar hole in the Queensland budget" to be handed down in three weeks.

At the time, Federal Justice Minister Michael Keenan said Queensland's payments were delayed while an audit checked Queensland's funding claims.

"This is because an ANAO (Australian National Audit Office) audit report found that the department has placed too much reliance on state audit/assurance activities and sign-offs, resulting in millions of dollars of ineligible expenditure."

However Ms Trad, whose department has researched the rationale behind the federal government's decision for two weeks, angrily rejects the claims of "ineligible expenditure" being found by the Australian National Audit Office.

"The Commonwealth paid Queensland $1.2 billion in June 2015 in relation to the 2013-14 (natural disaster funding) claim, despite the ANAO report having already been released and Emergency Management Australia commencing the outstanding claims re-examination."

Ms Trad said she understood – at the time of the federal budget - the federal government had not appointed an auditor to examine Queensland's claims.

"The Commonwealth Government has left the Queensland Government out of pocket," she writes in the May 24 letter.

"We are in the midst of negotiating with the Commonwealth on natural disaster funding reforms and this approach by the Commonwealth is completely disingenuous."

However Queensland-based LNP Senator James McGrath said more than $100 million in ineligible applications were lodged by Queensland three years ago, between 2009-2012.

"Queensland's own Audit Office found that over $115 million ineligible claims were paid against the QLD Government's 2009-2012 NDRRA claims," Senator McGrath said.

"As is appropriate, an assurance audit is being undertaken to address the concerns raised in the previous report and recommend ways to strengthen the program into the future," he said.

Senator McGrath said the $1.2 billion was still in the federal budget's four-year projections, but would not be paid until the most recent submissions were checked.

"Naturally we need to ensure all claims are eligible before they can be reimbursed," he said.

Senator McGrath repeated the assertion by federal Treasurer Scott Morrison's that the federal government would help if asked during future storm and cyclone seasons.

"The current assessment audit of the NDRRA has no bearing on our ability to assist if future natural disasters occur," he said.

"The Australian Government stands ready to assist communities in need. We always have and always will."

Senator  Barry O'Sullivan did not reply to questions asked by Fairfax Media.

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