Australia's Aristocrats Broken by Drought ; for the First Time White Rural Farmers, Ruined by Lack of Rain, Trade W Ars and Recession, Have Had to Swallow Their Pride and Ask for a Handout, Just like the Aborigines They Once Employed

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In the early hours of Friday 9 December, Sandra Hoare, a 21-year- old nurse on duty alone at the hospital in the small northern New South Wales town of Walgett, walked outside to investigate a noise. Ms Hoare was engaged to a local policeman, and h ad only just moved to the town; the wedding would never take place.

According to police, two men grabbed her, held a machete to her throat and marched her to a nearby park where they held her down and raped her. Her assailants then dragged her further away where one of them struck her on the neck with the machete and killed her.

Even in the best of times, Sandra Hoare's murder would have shaken Walgett. Things like that don't normally happen in quiet Australian country towns. But this is the worst of times, and the murder served to compound the misery of the place. Death is already hovering over Walgett and the bare, flat plains that stretch for hundreds of miles around it. Australia's most severe drought in memory has sapped the spirit of the town, breaking up families, bankrupting farms and undoing a way of life that country Australians have known for the best part of a century.

Australians have lived through droughts before. What makes this one so crippling is that it comes on top of the financial bust which followed the 1980s boom, when thousands of farmers borrowed to expand their holdings on the strength of good seasons withwool and grains. Then the world market for wool collapsed, grain growers became caught in a trade war between the US and the European Union, and interest rates soared as Australia went into recession in 1990.

Farmers were left trapped with no income and unsustainable debts. The drought began that year, and has since crept to cover 93 per cent of New South Wales and 45 per cent of Queensland, normally Australia's most agriculturally-rich region, about 10 timesthe size of Britain. The drought will wipe pounds 1bn off Australia's export income next year, and there is no end in sight. In many areas there has been no significant rainfall for four years - showers, but nothing that could begin to restore the balance of the land.

I drove 570 miles through the Outback to reach Walgett, leaving behind the coast where city Australians were gearing up for big spending and summer holidays by the beach. The urban economic recovery has left their country cousins more isolated than ever,retiring further into catacombs of poverty and debt.

For the first time since Europeans settled this region in the 1880s, farmers and the original black inhabitants have been reduced to the same level of relying on government hand-outs to survive. Racial tensions, never far below the surface, have been heightened since police arrested two local unemployed Aboriginal cousins in their early 20s and charged them with Sandra Hoare's murder.

The farmers who have suffered come from families that were once Australia's unofficial aristocrats, financially and socially, a status conferred on them as suppliers of wool, beef and grains to the world. John Campbell, the mayor of Walgett, belongs to one such family. When his Scottish grandfather settled the family holding in 1903, Walgett was still basically frontier territory: land was there for the taking. For three generations, the land made its owners fortunes. They always employed another whitefamily and several Aborigines.

Decline set in when the wool market collapsed in the 1970s, and the costs of production for Australia's unsubsidised farmers began to outstrip their incomes. Jobs disappeared on farms, and the Aboriginal workers, prized for their skills with horses and cattle, became fringe dwellers in town - most of them never to work again.

When I met John Campbell, he had been up since 4.45 am, hand- feeding his sheep with hay. He now lives on the family's 11,000 acres alone. His wife and two sons have gone. "My wife said to me one day, `We're constantly in drought and constantly in debt. …