DROUGHT-hit communities and farmers in Gippsland will receive a boost from the federal government's $709 million drought relief package.
Gippsland MHR Darren Chester said the package was designed to support Gippsland farmers and the surrounding communities.
"This will see money flow right through the Gippsland economy," he said.
"Farmers in Gippsland may be eligible to apply for loans of up to $2 million with no interest or repayments for the first two years.
"These loans will help farmers remain sustainable and get back on their feet when the drought breaks."
"Recent rain has been welcomed, but there's still a long way to go for many of our farming families to rebuild their businesses."
Mr Chester said Gippsland businesses would also be eligible for loans.
"For the first time businesses in Gippsland that are dependent on agriculture may also be eligible to apply for interest-free loans of up to $500,000," he said.
"This will protect jobs in Gippsland and make sure we can bounce back once the drought breaks.
"Gippsland has been doing it tough through this drought, and this package will help everyone get through it.
"It helps to protect our jobs and economy so when the drought breaks we will bounce back faster."
The package includes $378 million for drought-affected community projects, $138.9 million for the Roads to Recovery initiative, $10 million for schools to provide concessional fees to affected families and a $5 million childcare fund.
But shadow agriculture minister Joel Fitzgibbon said the government's package was disappointing.
"More loans, more loans, rebadged loans," he said.
"Loans which are hard to secure because of the viability test.
"How do you prove viability when you are entering your seventh, eighth or ninth year of severe drought?"
Mr Fitzgibbon said the government lacked a long-term drought management plan.
Farmers for Climate Action says the federal government's latest drought package must be matched with meaningful action to address climate change if rural Australia is to thrive into the future.
The organisation's deputy chair and farmer Charlie Prell said without decisive action to cut greenhouse gas emissions, droughts were likely to become more intense, and more difficult and more expensive to respond to.
"This funding provides some relief," he said.
"But if policy makers don't also commit to moving away from fossil fuels towards clean energy, and accelerate a national climate change and agriculture work program, their response is incomplete and insincere," Mr Prell said.
The Australian Local Government Association has welcomed the new drought assistance measures, saying they will be of real benefit to drought-affected councils and communities.
The association's acting president, Linda Scott, said councils had identified a range of projects that could be rolled out rapidly to support their communities, including farmers and farm-dependent businesses.
" Wherever possible, these projects have multiple benefits including jobs, infrastructure upgrades and community wellbeing," she said.
However, Cr Scott hoped the Commonwealth would allow flexibility in how the money was spent.
"Local governments, as the closest level of government to the community, understand what is required to support their communities effectively.
"Whether this is infrastructure upgrades, buy local initiatives, projects to augment the water supply or local community events, councils will deliver projects that create local jobs, support local businesses, and build community wellbeing."