October 25, 2018 / 10:36 PM / 10 months ago

Australia eyes A$3.9 bln drought fund for farm communities

MELBOURNE, Oct 26 (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.

“It’s really about putting our money away for a non-rainy day,” Morrison said on Channel 7’s Sunrise television program. “It’s about ensuring that we improve our resilience in the long term.”

Recent rains in Australia have done little to relieve the drought gripping the country’s southeast, 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.

Prime Minister Scott 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 around A$2.4 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 new fund, expected to be discussed at a summit in Canberra on Friday before going to parliament for approval, is designed to go beyond short-term relief.

“We’ve also got to go through to the recovery and to the resilience of the long term, and this future drought fund I think provides some certainty and security for farmers and rural communities into the future,” Morrison said.

$1 = 1.4128 Australian dollars Reporting by Sonali Paul Editing by Toni Reinhold

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