The Federal Government is expected to announce a drought assistance package next week following a ‘listening tour’ by Prime Minister Tony Abbott and Agriculture minister Barnaby Joyce to drought stricken areas of Queensland and northern New South Wales yesterday and today.

Mr Abbott and Mr Joyce visited properties near Bourke and Longreach on Sunday to talk to farmers and community leaders about their needs, and will tour a property near Broken Hill today ahead of a cabinet meeting to discuss drought relief.

They were met with requests for immediate income support, social support services and assistance to restructure debt, not just for farmers but local businesses that service the agricultural sector as well.

The Prime Minister told farmers the Government recognised that the current drought was a natural disaster and that assistance was needed. With Government finances tight, any new drought relief package would have to be both 'appropriate and fiscally responsible'.

"We are very confident we are close to finalising a drought package which will address people's economic and social needs," he told assembled farmers at a property near Bourke.

Central to the package that is currently being drafted, according to media reports, will be a move to redefine drought as a ‘natural disaster’, which will open the way for disaster-relief in the form of cash payments and targeted welfare spending for families and individuals when drought hits.

According to a report in The Australian, the package Mr Abbott and Mr Joyce are preparing to take to Cabinet will allow farmers to access larger and cheaper Government-backed loans.

Mr Joyce is reportedly hoping to expand the money available for concessional loans in the Farm Finance package from $420 million to $700m; allow farmers to refinance up to $2m of debt instead of the current $650,000 maximum under the package; extend the timeframe for repayments from five years to 10 years; and reduce the interest rate to below 4.5pc.

Drought-stricken farmers are also likely to become eligible for disaster-relief cash payments and ongoing welfare funding, as is available to bushfire and flood-disaster victims.

The package still has to win the support of Cabinet, but it seems likely that it will carry the weight of Prime Minister Tony Abbott’s support.

He told the media on the weekend that offering drought relief to farmers was entirely different to SPC Ardmona’s request for support and calls by car manufacturers for taxpayer subsidies.

“There is a world of difference between a company saying to a government, ‘prop up our business’, and a government helping people respond to a natural disaster,” Mr Abbott said, according to the Australian.

“This is a government that is determined to stand by the people of Australia in good times and in bad.”

However he added that failing farm businesses would not be “propped up”.

“Country people aren’t victims, they are fighters: they are fighting for their farms, their families, their communities and their futures,” Mr Abbott said. “They have always had to deal with droughts and flooding rain but some droughts are worse than others and of such a severity that they are more akin to a natural disaster.

“It is not the government’s job to help people run their business but it is the government’s job to help people cope with a national disaster; and 18-24 months without rain is just such an extreme event.”