Small business drought relief

Prime Minister John Howard has announced extra drought relief payments to farmers and small businesses worth $714 million over two years.

Assistance will be extended to more categories of small businesses in drought affected towns, relaxing the rule that to qualify for interest-rate subsidies a business needed to prove that 70% of its income was farm related.

Exit grants for farmers that leave the land have doubled to $150,000. And the amount of off-farm income that can be earned before drought assistance is withdrawn has been increased.

More than two thirds of agricultural land was already drought-declared and the Federal Government yesterday extended this to all rural regions of NSW and South Australia and parts of Tasmania.

Griffith lies west of the Newell highway in NSW, an area identified as one of those worst hit by the drought. Stephen Joyce, the economic development manager for the Griffith City Council, says businesses in his region have been dramatically affected by drought.

Griffith town is surrounded by irrigators and dry farmers. This year the holders of general security water allocations will get no water, and those with high security water rights will get 60% of their allocation. But this is better than last year, when they got 20%.

Joyce says that in Griffith no local businesses have closed but there have been jobs lost, particularly in agricultural businesses supplying farmers with seed and fertilisers. He says many of dry area farmers are now running sheep through their winter crops because they didn’t get the rain when they needed it.

Smaller towns further west are even worse affected, he says. Out there, businesses have closed.

He says the money from the Federal Government is useful. “It has shown that there is a commitment to helping, but it could be perceived as a bit late. A lot of these farmers have being going through drought for six years. For farmers, you hope you don’t get to exit grant stage.”

Joyce says the assistance needs to be ongoing, until the drought ends.

The Government’s plan has been supported by Opposition leader Kevin Rudd, but others have criticised John Howard for failing to recognise that the drought could be permanent due to climate change.