Economic climate in Australia a dilemma for policy makers

Parts of the Australian economy are booming while others, like drought stricken NSW are suffering, posing a dilemma for policy makers, Prime Minister John Howard said today.

Mr Howard said that despite most of the economy flourishing, there were individual sectors doing it tough, which made it difficult for policy makers to assist everyone.

"The economy is mixed, many parts of it are on fire, other parts are sadly bone dry and I saw some of them last week," Mr Howard told Macquarie Radio today.

"That's the dilemma that policy makers have at the moment.

"In aggregate the economy is booming, if you look at individual parts ... but NSW is certainly going through a weaker phase than the rest of the country."

Mr Howard said some of the pain would be offset by the federal government's policy to pay 50 per cent of drought stricken farmers' interest bill in their first year of drought.

"If they are in their second or subsequent year of drought the federal government pays 80 per cent of their interest bill, so we do have a particular scheme to help the drought affected farmers," Mr Howard said.

- AAP