CANBERRA - Prime Minister John Howard has promised Australians will stand shoulder to shoulder with drought-stricken farmers, as he flagged plans to boost help to the bush.
Treasurer Peter Costello has warned Australia is facing its worst drought ever, plunging rural Australians into recession.
And the government is worried dire circumstances in the bush could spark a rise in rural suicides.
Mr Howard pledged to finetune schemes to help farmers, indicating the government would next week consider changes to the exceptional circumstances drought assistance package.
"I just want farmers to know that they are not alone and their fellow Australians, through the national government, will be there to help them," he told Southern Cross Broadcasting.
"When the bush is suffering we feel it.
"I would expect this drought to leave a very big impression on the Australian psyche."
As Australian temperatures rise year after year and rain becomes more scarce climate change, caused by global warming, was a serious problem, Mr Howard acknowledged.
The government has been widely criticised for not signing the Kyoto Protocol on climate change but Mr Howard said the drought will not change his mind.
"I don't think it alters my outlook on Kyoto, but it certainly emphasises that the world does have a problem with climate change," he said.
The government is expected to seriously examine its options on drought assistance next week.
Mr Howard indicated the government was prepared to widen the criteria for assistance.
"As areas remain in drought, the exceptionable circumstances (scheme) will be extended," he said.
"Where areas not now in drought should be declared, then they will be declared."
Concerns about rural Australia are being compounded by fears of another interest rate rise.
Economists' expectations are rising that the Reserve Bank may lift rates again next month as the urban economy continues to show strength.
Deputy Prime Minister Mark Vaile, the Nationals leader, and Mr Howard have both urged the Reserve Bank to consider farmers before it makes its next move on interest rates.
Mr Howard said the state of the nation's rural areas should be taken into account when the bank weighed up whether or not to raise interest rates.
But he admitted inflation would be a bigger factor for the bank.
Farmer and Liberal senator Bill Heffernan, a close ally of Mr Howard's, is confident the government is well aware of the trouble in rural Australia.
"The immediate message for the bush is that the government is well aware of the issue," he told ABC Television.
Opposition Leader Kim Beazley is promising bipartisan support for any aid to farmers.
"This is going to be the worst year I can remember for a very long time for Australian farmers," he told reporters.
"Any form of assistance we will give bipartisan support to.
"We do actually have in place quite generous provisions, the question is accessing them and making sure you can access them for sufficient length of time."
But Mr Beazley also wants the government to take action on climate change.
"Every farmer, I think most Australians now understand, we have a much broader problem here," he said.
"We have a global warming issue on our hands.
"You cannot fix the water crisis in this country unless you fix the global warming issues."
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