MELBOURNE (Reuters) - The Australian government proposed on Friday setting up a A$3.9 billion ($2.8 billion) fund for water infrastructure and drought related projects to buffer farming communities from future droughts, as parts of the country endure extreme dry conditions.
“This is about putting money away for a non-rainy day in the future,” Prime Minister Scott Morrison said at a drought summit in Canberra. “And there is no time to waste.”
Recent rains in Australia have done little to relieve the drought gripping the country’s east, which has turned pastures into dust bowls, forced graziers to buy expensive grain to keep their herds alive, and led farmers to slaughter sheep and cattle.
Morrison said communities would be able to draw down A$100 million a year from the fund’s earnings to invest in projects. The fund is expected to grow to A$5 billion.
Canberra has already promised more than A$1.8 billion in relief for drought-afflicted farmers, including tax breaks, low-interest loans and mental health assistance. The state of New South Wales has provided more than A$1 billion in aid.
“The drought, which for some Australians I’ve visited is easily the worst for them in living memory, and it’s a long way from breaking,” Morrison told the summit.
The summit brought together government officials, farmers, weather experts, lenders, charities and other experts to discuss how to coordinate efforts to deal with drought relief, recovery and long term resilience.
The new fund, which needs parliamentary approval, is designed to go beyond immediate relief to aid the agriculture sector for the long-term with water infrastructure, projects and research.
“It’s about helping farmers and communities to prepare and adapt to the impact of drought,” Morrison said.
There is little relief in sight for struggling farmers on the weather front. The Bureau of Meteorology warned that the hot and dry conditions were likely to intensify over the next six months.
As a result, crop production in eastern Australia is expected to be around half the average over the past 20 years, the head of the Australian Bureau of Agricultural and Resource Economics and Sciences, Steve Hatfield-Dodds, told the summit.
On the positive side, Hatfield-Dodds said a smaller section of the country has been affected than in previous droughts, and the impact on farmers has been offset by better economic conditions than in earlier droughts.
“There are still substantial down side risks. It’s also possible that things will improve quickly if it does start raining,” Hatfield-Dodds said.
Reporting by Sonali Paul; Editing by Toni Reinhold