The Federal Government has introduced a bill to set up a $5 billion fund for drought-related spending that will be managed by the Future Fund Board of Guardians.
Minister for Finance and the Public Service Mathias Cormann said the fund will kick off with $3.9 billion and grow to $5 billion over the next decade.
"From 1 July 2020, $100 million will be directed annually to fund a wide range of drought resilience projects, while the balance is reinvested the fund," Cormann said in a statement.
"A predictable funding stream for drought resilience will enable Australia's $60 billion agricultural industries to fulfil their potential."
Federal agriculture minister David Littleproud said the fund was a forward-thinking policy that will provide funding on top of existing funding for drought resilience, preparedness and recovery.
"We're guaranteeing long-term revenue to build drought resilience," Littleproud said.
"The Future Drought Fund will help give out farmers tools to prepare for, manage and sustain their businesses through drought.
"The Future Drought Fund will deliver infrastructure projects, promote the adoption of new technology and help improve environmental and natural resource management on farms.
"Importantly, it will not be used to fund existing measures already in place."
The government says it has delivered more than $1.8 billion in assistance measures and concessional loans to support drought-affected farmers and communities.