The money will help provide jobs for people hit by recent droughts, and be invested in work likely to prompt local economic activity.

Projects include a plan to provide shade and a synthetic bowling green at the Avoca Country Golf Bowling Club.

The footpath at Moonambel from the recreation reserve into town will also be upgraded and the car park at Natte Yallock recreation reserve will be upgraded.

The grant will also help fund tree planting at towns around the shire, including around the Beaufort Lake Foreshore development.

The shire's acting CEO Douglas Gowans welcomed news of the funding, calling it "a real shot in the arm for the Pyrenees community."

"The whole point of the exercise is to stimulate the economy," he said.

Bore work designed to give farmers more access to water has already taken place in the north of the shire. A first round of funding, also for a million dollars, has been spent on installing new bores across the shire and making improvements to the current bore network.

Mr Gowans said the new cash would also be used for community hall improvements.

Tenders are now out for some of the projects, with works due to finish by the end of this year.

As well as the drought, residents in the shire have seen a significant dent in its income as a result of the COVID-19.

The Rainbow Serpent Festival was also cancelled earlier this year, following a bushfire in the Lexton area where the event is held as well as the pandemic restrictions.

Mr Gowans said the festival organisers had some planning hurdles they needed to address before any future events. If finalised, he said he would welcome the festival back next year, saying it brought about 18,000 people into the shire and pumped millions of dollars into the local economy.

The federal drought relief funding is available to municipalities with an average of a fifth or less of their usual rainfall across at least half their area in the past two years.

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