Victoria's Regional Development Minister Jaclyn Symes says the state's principal rural funding body is working with employers in the Dennington area
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That follows last week's announcement Fonterra was going to close its Dennington factory, due to drought and the continuing decline in milk production.
Fonterra Australia's managing director Rene Dedoncker said the decision to close the site was a responsible decision for the long-term.
Ms Symes said this year's State Budget committed $134 million for one year to support the operations of Regional Development Victoria.
"One-year funding is important because it gives me the flexibility to ensure our regional development approach is reflective of conditions as possible," Ms Symes said.
She said until the end of the next financial year, $50m had been allocated for job-creating projects and community infrastructure.
That was part of the $160m jobs and investment fund, aimed at supporting regional job projects.
"RDV funding has to be flexible and dynamic and be able to respond to areas of need, for example, Fonterra, announcing 98 job losses," Ms Symes said.
"I want RDV on the ground, saying 'are their other employers here who we can help expand, and invest, so some of those people have places to go?
"That's the type of response we want from RDV,"
Ms Symes said she was contacted "a couple of hours" before the announcement and was ready to go.
"Those jobs are there until November, but we are working with them now."
Ms Symes said regional Victorian business would also benefit from further cuts to payroll tax.
"Over the last two budgets, we have halved the payroll tax for regional businesses, to under 2.5per cent, and this year we are providing further tax relief," she said.
Businesses in country Victoria would pay a tax rate of only 1.2pc by 2022-23, which was equal to a quarter of the metropolitan rate.
The current business location test would be removed from July.
"If you are a business you should come and set up in country Victoria, instead of Melbourne," Ms Symes said.