Interest-free loans to ease drought burden

Interest-free loans to ease drought burden

Politics
Prime Minister Scott Morrison has announced a new round of drought assistance.

Prime Minister Scott Morrison has announced a new round of drought assistance.

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The Federal government has unveiled a new drought assistance package with new loan products for farmers and agricultural-reliant small business, as well as hundreds of millions of dollars in direct investments for local government initiatives and infrastructure.

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THE Federal government has unveiled a new drought assistance package with new loan products for farmers and agricultural-reliant small business, as well as hundreds of millions of dollars in direct investments for local government initiatives and infrastructure.

"We will continue to keep providing more support as the drought rolls on," said Prime Minister Scott Morrison.

"Our drought plan is not set and forget.

"We have been back on the ground listening to farmers and their communities, and this package is a direct response to their feedback."

The government will extend the concessional loans available to farmers through the Regional Investment Corporation (RIC) to small businesses.

To be eligible the enterprise must have less than 20 employees and be dependent on agriculture.

Concessional loans of up to $500,000 are available featuring a two-year interest-free period, interest-only payment for years three to five, and interest and principal for the final four years.

Drought loans are already available to farmers and the Federal government's announcement will improve the terms available to new applicants.

Concessional loans of up to $2 million are available with a two-year interest-free period, interest-only payment for years three to five, and interest and principal for the final four years.

Those with existing loans, offered at 3.11 per cent variable interest, can renegotiate to include the two-year interest-free period.

Farmers can use RIC loans to refinance debt, invest in drought preparation, keep their business afloat during drought, cover operating expenses, and improve their business operations.

It's unclear when the loans will be made available.

This will be a key concern for small business and farmers, many of whom have already struggled through several years of drought.

Pastoralists and Graziers Association of WA president Tony Seabrook said although interest-free loans would offer some help for struggling farmers, it was a "band-aid solution".

"While the loans are beneficial for those farmers that qualify, it is only a subsidiary," Mr Seabrook said.

"It may help the day-to-day running of their business, but at the end of the day they will still be in debt.

"And it won't benefit everyone, there are plenty of people who are doing it tough but will be unlikely to qualify.

"Given that WA is only just being recognised of having drought-affected areas and the drought problem has been very Eastern States centric, I expect that farmers in the east will be looked at first.

"Rather than looking at band- aid solutions, the government really needs to look at more long-term ways to help, like decreasing the capital gains tax (Federal tax) and payroll tax (State tax), which would benefit all farmers for the long-term."

Mr Seabrook also emphasised that education costs were a major issue for farmers in distant and isolated locations, which he thought the government (State and/or Federal) needed to address.

The government has expanded the reach of the Drought Communities Program, adding six local governments to the list of recipients of a $1m grant to be spent on infrastructure and drought relief.

Local governments have received nearly $130m in drought funding through this initiative to date.

A reserve of $50m will be set aside to extend the program at the government's discretion.

Up to $138.9m will be tipped into road building and maintenance under a special payment to the Roads to Recovery to boost local jobs through new construction.

The government announced its previous drought support initiative late last month, which included $3000 in direct assistance to farmers for basic needs, funding for local councils, and a simplification of the Farm Household Allowance.

It was criticised for its failure to deliver the support promised, with charity groups set to distribute the assistance yet to receive funding.

Federal Liberal Party Member for Durack Melissa Price has welcomed the increased support announced by the Prime Minister, saying that it will help WA farmers tackling drought.

"I know pastoralists and many local communities have been preparing for the coming summer as best they can, but it has been a long time since some of the pastoral regions in Durack have had any significant, consistent rain," Ms Price said.

"The assistance measures announced can help with family, staff and stock welfare throughout this summer and beyond.

"We (the Morrison government) are stepping up our drought response to meet the increasing needs in Western Australia so that farmers, local government and regional business have access to the necessary assistance."

Federal Agriculture Minister Bridget McKenzie said a new loans program for small businesses and making existing drought loans interest free for two years would deliver immediate support for everything from buying fodder to transporting stock and agisting cattle, through to paying staff and purchasing new equipment.

"These loans mean farmers and small business owners can do what they need to, right now at zero cost," Ms McKenzie said.

"Farmers will not have to pay a cent for the next two years and we'll keep assessing the program if the drought runs longer than that to ensure repayments are affordable.

"With $200m worth of loans committed already, we estimate the new small business program and the changes to the Drought Loans for farms will see around $1.2 billion issued over the next three years that they can put to their priorities.

"These loans mean farmers and small business owners can do what they need to, right now at zero cost.

"Farmers will not have to pay a cent for the next two years and we'll keep assessing the program if the drought runs longer than that to ensure repayments are affordable."

The government has redrawn the conditions of the Building Better Regions to create a targeted round of $200m drought spending.

Rounds one to three of the $840m initiative have distributed funds to local governments and community groups.

It's unclear what the terms of the new drought round are.

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