The current drought is having an immense impact on rural Australia and is one of the most severe in the last 100 years. In recognition of the particular severity and extent of the drought, the Government will introduce a further package of one-off drought relief measures costing $368m over three years. These comprehensive measures (attached) will provide financial support to farmers and communities hardest hit by the drought. These new measures are on top of the over $360m that the Commonwealth already expects to spend for dealing with this drought.
The Government has decided to provide six months interim income support for all eligible farmers in areas suffering a 1 in 20 year rainfall deficiency over the nine months March 2002 - November 2002. New South Wales is clearly hardest hit by this drought, with virtually the whole state now drought declared. Over 80% of NSW farmers are facing a 1 in 20 year rainfall deficiency. In recognition of this special state wide hardship, the Government has decided all of NSW will be a declared area for interim support. Accordingly, all eligible NSW farmers will receive the six months interim support.
Should the proportion of farmers affected in a like manner in any other state reach 80%, eligible farmers across the whole state will have access to similar interim income support.
Eligibility for the additional support available under full exceptional circumstances support arrangements will continue to be assessed on a case by case basis under existing criteria.
In addition, the Government will provide an interest rate subsidy on new and additional loans up to $100,000, available for two years, for stock support and drought recovery. This will be available to all newly eligible farmers in the areas listed above or already receiving interim income support or exceptional circumstances support. This new measure is vital to ensure farmers recover quickly and re-establish themselves financially when the drought breaks. Eligibility for this subsidy will accrue from today in respect of those farmers already receiving interim or full exceptional circumstances support or from the date of future interim or full EC declarations for those areas not currently eligible.
Small businesses in affected areas are also facing increasing financial hardship. To assist in their survival and recovery by giving them the extra cash flow they need, the Government will provide interest rate subsidies on new or existing loans up to $100,000 for two years for eligible small businesses in EC areas. Eligibility for this subsidy will accrue from today in respect of those small businesses already in areas receiving exceptional circumstances support or from the date of future full EC declarations for those in areas not currently eligible.
Many drought regions will face increasing unemployment, albeit of a temporary nature. The Government is keen to ensure that those who temporarily lose employment are kept in touch with the workforce and are able to remain in their communities. The Government will, therefore, be introducing a number of special measures to assist job seekers in drought affected areas. These include :
- Establishing Drought Force, a Work for the Dole type programme, in drought affected areas to develop and carry out activities that have a skill retention and drought mitigation flavour;
- Allow job seekers in drought affected areas access to job seeker training as soon as they become unemployed; and
- Allow employees in drought affected areas facing imminent retrenchment access to Job Matching services.
The measures announced today follow several other important decisions taken by the Government to improve preparation for, and response to, drought. These include introducing Farm Management Deposits at a cost of $470m this year in foregone revenue, relaxing the tax provision of FMD’s to allow farmers access to their deposits within the 12 months for coping with drought, introducing six months interim assistance for areas deemed to have a prima facie case, contributing $5m to the Farmhand Appeal, providing $1m for pest control in drought areas as well as a number of other measures to ease the burden of drought.
This new package follows widespread consultation with drought affected communities. Government Members, Ministers and myself have extensively visited drought affected areas to find out from farmers and their communities themselves what the most pressing priorities for assistance are. Farmers and businesses were very clear they needed short term assistance to get through this drought in a way that kept their communities together and kept money circulating in the communities. This is what we have sought to achieve.
Additional Measures
- Six months income support for all eligible farmers in areas suffering a 1 in 20 year rainfall deficiency over the nine months March 2002 - November 2002 ($134.4m):
- as more than 80% of farmers in NSW are in areas that meet this criterion, eligible farmers in the whole State will be entitled to immediate interim income support; and
- should the proportion of farmers affected in any other state reach 80%, eligible farmers across the whole state will have access to similar income support.
- An interest rate subsidy on commercial loans for stock support and drought recovery for eligible farmers in the areas receiving drought income support above. This will also be available to eligible farmers already receiving interim income support or exceptional circumstances support ($130.8m):
- this is additional to the EC farm business support arrangements and will be available on new and additional loans up to $100,000 to farmers at a rate of five percentage points on commercial loans or 50 per cent of the prevailing interest rate, whichever is the lower.
- An interest rate subsidy on existing or new commercial loans up to $100,000 to small business in EC declared areas at a rate of five percentage points on commercial loans or 50 per cent of the prevailing interest rate, whichever is the lower ($70m). Subsidies will be subject to eligibility criteria including that there are less than 20 full time or equivalent employees, the decline is due to EC and related effects and that 60% of the business activity must be within an EC area, the business is solvent and is the primary source of the beneficial owners income.
- The interest rate subsidies will be available for two years, with a review in the second year to determine continuing need. The interim income support and interest rate subsidies will be provided through Centrelink.
- EC applications from the states will continue to be assessed under normal EC criteria.
- Establishing Drought Force, a Work for the Dole type programme, in drought affected areas to develop and carry out activities that have a skill retention and drought mitigation flavour. These might include restoration of farm structures, maintenance of irrigation channels, upgrading community facilities or distribution of fodder. Participants will have immediate access to a Training Credit of $800 if they commence training while part of Drought Force. Drought Force would commence in February 2003.
- Allow job seekers in drought affected areas access to job seeker training as soon as they become unemployed; and
- Allow employees in drought affected areas facing imminent retrenchment access to Job Matching services.
9 December 2002