The Abbott government has diverted $100 million in drought loan assistance to farmers in NSW and Queensland as a widening drought threatens to stoke demand for further aid.
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Eligible businesses will be able to apply for as much as $1 million over 10 years at a concessional loan rate set initially at 3.21 per cent.
"Large parts of Queensland and some parts of New South Wales are experiencing the worst dry conditions on record, with rainfall at historical lows in many areas," Barnaby Joyce, the Minister for Agriculture, said.
A spokesman for Mr Joyce said the $100 million had been transferred from programs for Western Australia and Tasmania that were not used.
"There are no plans for any extra funds at this stage," the spokesman said, adding that "everyone's hoping that the drought will end".
The latest rainfall deficiency maps compiled by the Bureau of Meteorology show an arc of serious or severe rain shortfall stretching from inland Queensland, through central NSW and from western Victoria into South Australia.
"What we're seeing is a re-emergence of drought conditions," Karl Braganza, manager of climate monitoring at the bureau, said.
Nationally, spring rainfall was about one-third below average. For Victoria, the drop was about 40 per cent and 50 per cent across NSW. Record heat across inland Australia had also increased evaporation, further drying soils, while reservoir levels are also falling.
The presence of El Nino-like conditions mean this summer is likely to be hotter and drier than average, potentially exacerbating drought conditions in regions already affected.
Dr Braganza said that while the biggest rainfall impacts of El Ninos are usually in NSW and Queensland, Victoria can also expect dry conditions to persist.
While the key winter crops are largely in, an extended dry spell will likely hurt graziers, he said.
Labor's agriculture and rural affairs spokesman Joel Fitzgibbon said there was no new money in the drought recovery package and the government had simply moved funds from another farm assistance scheme to establish it.
The money had come out of the farm finance package, Labor's original concessional loans schemes for farmers experiencing hardship, Mr Fitzgibbon said.
"It doesn't do anything to help a farmer currently in drought because the eligibility criteria are such that you have to demonstrate it's for drought recovery," he said.
He said Labor had hoped the government would relax eligibility criteria for the farm household allowance to help farmers who have been unable to access the scheme.
With Lisa Cox
