The government is yet to decide whether to help pay for flood protection on the Waiho River in Westland, Finance Minister Bill English says.
Almost 200 people had to be evacuated when the flooded Waiho River smashed its way through a stopbank, carving a path through a hotel and heading towards a camping ground late on Wednesday night.
Westland Civil Defence said if the river was not protected, people could die the next time it bursts its banks.
The region's mayor, Mike Havill, said he had asked the government for help, and Mr English told Morning Report it would be given if the risks were great enough.
"Central government tries to be as even handed as possible by not picking out some for more assistance than others. In this case you can see that a very small community has a high volume of tourists there."
He said the situation was not just potentially dangerous, it had turned out to be actually dangerous and expected there would be some discussion.
He said the government would talk with local authorities soon.
The mayor and civil defence said the government had already been told about the potential for disaster but was ignoring the warnings.
Westland's local authorities were fuming after they said warnings about potentially disastrous flooding were ignored.
They said if the government did not face up to the problem urgently then the consequences could be dire.
Andy Thompson from Westland Civil Defence said a detailed evacuation plan was ready because locals knew about the risks from the river.
But he warned that next time it happened, people could die.
"If it's not protected there is definitely potential for fatalities there and if a significant flood comes in at an inopportune time, and people don't react quick enough, yes, there's definitely potential for fatalities."
West Coast Regional Council chairman Andrew Robb said councils could not get the rates needed from the scenic drawcard because 85 percent of the land was owned by DOC.
Mr Robb said the river was a "changing beast", but with the right amount of flood protection the water could have been kept at bay.
"We know the risks of the river because of the information that's been gathered with engineering and just seeing how the river reacts in floods, and that it was probably inevitable at some point that without protection it was going to go through."
Managing director of Scenic Circle, Brandan Taylor, which owns Franz Josef Scenic Hotel said a wing of the hotel had been destroyed in the flood.
"We've tried so many times with the regional and the district council to maintain that stopbank as best we can and they keep telling us that they're under resourced and they actually can't."
Mayor of Westland District Council Mike Havill said the infrastructure catering for 5000 visitors per day at peak season was still stuck in the '70s, and the population of 300 did not have the funds needed to protect the area.
New Zealand's tourism reputation was being put at risk, Mr Havill warned.
He said everyone knew what needed to be done, but warnings to central government had fallen on deaf ears.
"This is a major tourist destination. No one wants to expose anyone to any risk in this day and age but this risk is there and it's real and it's time the government faced up to it."
Mr Havill said he had asked for government help for the last two years, but did not want any more messing around.
"This is bloody frustrating and if all they do is send someone down from Wellington to write another report then God help us," he said.
Minister of Civil Defence Nikki Kaye was not available for comment.