• Written by Michelle Grattan, Professorial Fellow, University of Canberra
The business drought loans will be up to $500,000, and include a two-year interest free period. AAP/Dan Peled

The government will provide concessional “drought loans” for small businesses dependent on agriculture, as well as improving the terms of loans under the existing scheme for farmers, in a package approved by cabinet on Wednesday.

Measures to be unveiled on Thursday also include hundred of millions of dollars of direct investment into communities.

The initiatives come after intense pressure on the Coalition to do more for those hit by one of the country’s worst-ever droughts, with Scott Morrison very sensitive to how the issue is playing not just in the regions but among metropolitan voters.

Costings were still being finalised late Wednesday but sources said the package was worth more than $500 million.

The business drought loans will be up to $500,000. They will include a two year interest free period and interest only payments for years three to five, with interest and principal repayments in years six to ten.

Those set to benefit would include harvesting and shearing contractors, carriers, stock and station agents, and businesses dealing in agricultural equipment and repairs.

Businesses not directly linked to the farming sector – such as the local hairdresser or newsagent – would not be eligible.

The loans will be made through the Regional Investment Corporation – a Commonwealth body - with a small business defined as one with 19 or fewer employees.

The loans will be available immediately and no legislation is needed.

The improved terms for farmers loans will be see up to two years interest free, interest only payments for years three to five, and interest and principal payments for years six to ten. The current arrangements are interest only for the first five years and principal and interest for the rest of the 10 year loan.

The former co-ordinator-general for drought, Stephen Day, told the government that concerns had been constantly raised with him about the survival of small businesses in areas in drought.

Morrison said these businesses had been forced to seek overdrafts or other finance.

“Rural communities can’t function without these small businesses – that’s why we’re stepping in to provide this extra support,” he said.

The government says its planned extra direct investment will flow into projects that boost local businesses and jobs.

Six more local government areas will be added to the Drought Communities Program, at a cost of $6 million, and another $122 million will be available for the 122 local councils which have already received support of $1 million each.

The program funds infrastructure and local activities. An extra $50 million discretionary fund will support additional councils when needed. But this will be after a review of the program early in the new year.

Some $200 million will be redirected from the Building Better Regions Fund to set up a Special Drought Round, providing up to $10 million per project in local government areas.

Supplementary payments will be made under the Roads to Recovery program for 128 local government areas in drought for upgrades and maintenance. This is a re-purposing of $138.9 million.

Drought minister David Littleproud said the federal package was not linked to any requirement for state funding, which would have carried the risk of the states not matching the money. But he called on state governments to provide some relief on rates and payroll tax.

“We’re going to cut the cheque and we’re going to get the money out, because that’s what these local economies need now. They need stimulation …. We’re not going to play politics, we’re going to get on with the job and deliver, and hopefully the states will complement us with things like rate relief and also payroll tax”.

Deputy Prime Minister Michael McCormack said: “This suite of measures go to the heart of what matters to these communities. From small businesses to primary producers, we are working with communities to take the pressure off one of the worst droughts in history.

"Not only is the government continuing to respond as the drought progresses, but we are working on measures to assist in the recovery when the rains come, which includes the government’s billion dollar investment in water infrastructure.”

Agriculture Minister Bridget McKenzie said: “I know our farmers and our communities are doing it really tough right now but despite the current drought Australian agriculture has a bright future”.

Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Authors: Michelle Grattan, Professorial Fellow, University of Canberra

Read more http://theconversation.com/government-sets-up-concessional-loan-scheme-for-drought-hit-small-businesses-126529

Switch It Up: What’s the Relationship Between Lighting and Your Work Performance

It’s no secret that light has an immense impact on the way our bodies function on a daily basis. Light is closely linked to our circadian rhythms or our ‘built-in clocks’, and as such, it larg...

Lilly Miller - avatar Lilly Miller

How to Get Rid of Rats?

Do you suffer from scratching noise in the night or find strange signs such as gnawed pieces of wooden furniture or droppings in your house? Then, you have to prepare for an unpleasant fight with ro...

News Company - avatar News Company

VIDEO: Michelle Grattan on an extended travel ban, a royal commission, and zero emissions by 2050

Michelle Grattan talks with Assistant Professor Caroline Fisher about the week in politics, including the extension of the coronavirus travel ban, the royal commission into the bushfires, and labor&rs...

Michelle Grattan, Professorial Fellow, University of Canberra - avatar Michelle Grattan, Professorial Fellow, University of Canberra

I've seriously tried to believe capitalism and the planet can coexist, but I've lost faith

RAJAT GUPTA/EPAThis article is the first in a three-part series on radical ideas to solve the environmental crisis. As the Productivity Commission confirmed this week, Australia’s economy has ...

Samuel Alexander, Research fellow, Melbourne Sustainable Society Institute, University of Melbourne - avatar Samuel Alexander, Research fellow, Melbourne Sustainable Society Institute, University of Melbourne

What is hypnobirthing, the technique the Duchess of Cambridge used?

In a new parenting podcast, Catherine, the Duchess of Cambridge, said she used hypnobirthing techniques to help her get through severe morning sickness – a condition called hyperemesis gravidaru...

Mary Steen, Professor of Midwifery, University of South Australia - avatar Mary Steen, Professor of Midwifery, University of South Australia

Memories overboard! What the law says about claiming compensation for a holiday gone wrong

FRANCK ROBICHON/EPAWhen booking a luxury cruise, you generally expect relaxation and enjoyment, not forced quarantine and distress. Unfortunately, for the thousands of vacationers trapped on cruise s...

Mark Giancaspro, Lecturer in Law, University of Adelaide - avatar Mark Giancaspro, Lecturer in Law, University of Adelaide

Without more detail, it's premature to say voluntary assisted dying laws in Victoria are 'working well'

ShutterstockThe Voluntary Assisted Dying Review Board has this week published a report detailing the first six months of the legislation in action in Victoria. The report reveals 52 people legally e...

Courtney Hempton, Associate Research Fellow, Deakin University - avatar Courtney Hempton, Associate Research Fellow, Deakin University

I've always wondered: who would win in a fight between the Black Mamba and the Inland Taipan?

Wes Mountain/The Conversation, CC BY-NDThis is an article from I’ve Always Wondered, a series where readers send in questions they’d like an expert to answer. Send your question to always...

Timothy N. W. Jackson, Postdoctoral Research Fellow, Australian Venom Research Unit, University of Melbourne - avatar Timothy N. W. Jackson, Postdoctoral Research Fellow, Australian Venom Research Unit, University of Melbourne

Australia, we need to talk about who governs our city-states

Benny Marty/ShutterstockIn 1971, a Time magazine article, titled “Should New York City Be the 51st State?”, observed: States have not only short-changed and hamstrung their cities but a...

Benjamen Franklen Gussen, Lecturer in Law, Swinburne University of Technology - avatar Benjamen Franklen Gussen, Lecturer in Law, Swinburne University of Technology

Sick and Tired of Your Dead End Job? Try Teaching!

Tired of the same old grind at the office? Want an opportunity to impact lives both in your community and around the world? Do you love to travel and have new experiences? Teaching English is the perfect job for you! All you need is a willingness to ...

News Company - avatar News Company

The Impact of an Aging Population in Australia

There’s an issue on the horizon that Australia needs to prepare for. The portion of elderly citizens that make up the country’s overall population is increasing, and we might not have the infrastructure in place to support this. Australians h...

News Company - avatar News Company