Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
New drought package raises assistance to $1.25 Billion.

Download PDFDownload PDF



I am pleased to announce over $250 million in additional Australian Government assistance for farmers suffering the effects of the unremitting drought that continues to afflict many parts of Australia.

The new 2005 Drought Package is in addition to the $1 billion that the Australian Government already expects to spend in dealing with this drought.

This new package follows widespread consultation by the Government with drought affected communities and addresses the most pressing priorities, providing extra support for those farmers experiencing a third and fourth year of drought.

The Exceptional Circumstances (EC) Interest Rate Subsidy will be increased from 50 per cent to 80 per cent for farm businesses in the second and third year of an EC drought. This will provide a real boost to the prospects of many of our talented primary producers who would have viable continuing farm businesses were it not for the extraordinary circumstances of this long lasting drought. The Government expects to spend around $140 million on the increased subsidy.

From today, the Government will also relax the off-farm assets for EC business support assistance, doubling the current $217,500 off-farm assets threshold to $435,000 per farm business and providing an estimated $58 million in additional assistance. This change recognises that farm businesses are often operated by more than one family member or partner.

The long term nature of this drought has meant many farm families have had to increase the amount of off-farm work. To help the many farmers in this situation the Government will introduce for one year a $10,000 annual offset against the EC income support test. This means that farmers can earn an extra $10,000 income without affecting their eligibility for benefits and many more farm families will now be eligible for support. Nearly $50 million in additional income support to farm families in 2005-06 is expected from this one-off measure.

In addition, streamlined assessment arrangements to roll over assistance for areas affected by on-going EC drought will become a permanent feature. The streamlined assessment will also be used to review the status of the 22 areas that were not recommended for roll over last year.

The Government is keenly aware of the emotional toll the drought is taking on farmers and rural communities, and we will provide a further $6 million for counselling and farmers’ support services across the country. As well, the Country Women’s Association will receive an extra $3 million to support their efforts in meeting the immediate household needs of many producers and their families.

Australia’s young farmers are our farming future. It is critical they are empowered to effect change and be ready to handle droughts and other challenges. In recognition of the importance of young farmers to rural communities, the Government will hold a National Rural Youth Summit in September this year and provide $3 million to continue the Young People in Rural Industries Programme to 2008.

Our farming future depends on the long term sustainability of our land and water resources. To assist the efforts of farmers to better prepare for future droughts the Australian Government will run a special $10 million drought Envirofund round under the Natural Heritage Trust for activities that prepare and protect the land during drought and support sustainable drought recovery.

Details of the new 2005 Drought Package are attached.

30 May 2005


The 2005 Additional Drought Package - Details of New Measures

• Effective today, the off-farm assets for EC business support (interest rate subsidies) will be doubled from $217,500 to $435,000.

• Effective today, the rate of the interest rate subsidy provided to farmers in receipt of business support assistance will rise from 50 per cent to 80 per cent for subsidies paid in the second and subsequent years of an EC declaration.

• Subject to the passage of enabling legislation, from 1 July 2005 to 30 June 2006 farmers will benefit from a $10,000 annual offset against the income test for the EC Relief Payment (the Newstart Allowance equivalent component of EC). The new income test will apply to all farmers in EC areas. The measure will be reviewed before June 2006 to determine if the prevailing drought conditions and outlook warrant any extension.

• The streamlined re-assessment process for those EC declared areas nearing the end of their second year of assistance will become a permanent feature of EC arrangements. In the first instance, the 11 areas where EC declarations are due to cease by the end of 2005 will be assessed as a matter of priority.

• In recognition of the absence of effective rainfall in many regions over the autumn months and the limited prospects for winter cropping areas in southeast Australia, the Government will request the independent National Rural Advisory Council (NRAC) to immediately review the status for those 22 EC regions that it did not previously recommend for a roll-over under the streamlined EC assessment process. NRAC will also be able to consider the roll-over of parts of EC declared regions with any revised boundaries to be developed in consultation with industry, state and territory governments.

• Nearly $800,000 in additional funds will be provided to rural financial counselling services in recognition of increased workload and additional costs including office administration, fuel and accommodation as a result of drought. $1.2 million will be provided to appoint ten additional counsellors in key areas affected by the drought.

• The Government will provide a further $4 million to the Family Relationships Services Program to fund organisations to provide vital face-to-face counselling and other support measures related to the drought.

• The Government will provide $3 million to the Country Women’s Association’s (CWA) Emergency Aid Fund to allow the CWA to help meet immediate household needs of those farmers and their families who may otherwise be reluctant to apply for assistance.

• The Government will hold a National Young Farmers Forum in Canberra in early September to bring together young people directly involved in agriculture, fisheries and forestry to meet with stakeholders from Government and industry to discuss and understand the broader issues affecting Australian agriculture. This will help young farmers develop the skills and strategies needed to effect change and handle future challenges.



• The Government will continue the Young People in Rural Industries Programme and will spend another $3 million on this Programme until 2008.

• The Government will set up a new $10 million Envirofund round to allow individuals and community groups to access grants to undertake projects up to $50,000. Works and measures will be supported to: prepare and protect the land, water, vegetation and biodiversity resource base from the effects of the drought; assist preparations for recovery from the drought; and prevent environmental damage when the drought ends.