The Rudd Government has committed $300.0 million for a new on-farm irrigation efficiency grants program to help deliver a long-term sustainable future for our irrigation communities in the southern Murray-Darling Basin.

"This funding will play a crucial role in helping irrigation communities adjust to a future with less water by supporting farmers to invest in water-saving irrigation practices and technology," Senator Wong said.

"The Australian Government recognises the contribution individual farmers can make by using water wisely, and acknowledges the role that on-farm investment can play in securing a sustainable future for irrigated agriculture.

"The On-Farm Irrigation Efficiency Program will invest in more efficient irrigation systems in areas where a long-term economic and environmental benefit can be demonstrated.

"The new program will invite competitive bids from partners such as irrigation water providers, peak industry groups and catchment management authorities to deliver cost-effective 'tranches' of on-farm investment."

The new program will be modelled on the arrangements trialled through the On-Farm Irrigation Efficiency (Pilot Projects) program.

As with other irrigation efficiency programs, water entitlements transferred to the Commonwealth as part of this program must be treated as being outside any state trading limits such as the four per cent cap on out-of-district trade.

The projects must contribute to the long-term sustainable future of irrigation communities, deliver substantial and lasting returns of water to the environment to secure real improvements in river health, and deliver value for money.

The $300.0 million in funding comes from the $5.8 billion Sustainable Rural Water Use and Infrastructure program, a key plank of the Government's 10-year, $12.9 billion Water for the Future plan. Funding starts in 2009-10 and continues until 2013.

Water for the Future focuses on four key priorities: taking action on climate change, using water wisely, securing water supplies and supporting healthy rivers.

More information on this program and Water for the Future is available at: www.environment.gov.au.