PETER CAVE: There was grim news today from the Federal Government for farmers in the Murray-Darling basin.

Unless there's heavy rain in the next couple of months, there'll be no water allocated from rivers for irrigation.

The National Farmers Federation warns it could be devastating for the 55,000 farmers in the basin, in particular in the horticultural sector, who rely on water to grow such things as grapes and stone fruits.

The Prime Minister suggests praying for rain.

But the Opposition argues he should have acted earlier to prepare for this water crisis.

From Canberra Peta Donald reports.

PETA DONALD: It was a sombre Prime Minister who announced the results of a report into just how bad the shortage of water is in the Murray-Darling basin.

JOHN HOWARD: I'm sorry to report that the report, which has been delivered to both State Premiers and to me, indicates an unprecedentedly dangerous situation.

PETA DONALD: Unless there's heavy rain in the next six to eight weeks, water will only be made available for basic human consumption for farmers, and in the cities and towns. There'll be no water allocated for the environment and no water for irrigation.

And that's in the region that produces most of the country's irrigated agriculture.

Mr Howard says even if there is rain, it won't be possible to know if it's been enough to allocate water to irrigators until late July or well into August.

JOHN HOWARD: We should all pray for rain, because the situation for the farmers of Australia in the irrigation area of this country, in the Murray-Darling basin, is critical. And we must all hope and pray there is rain.

But even if there is, it will be some time before we know the full extent of it, and whether or not it will enable some allocation to be made.

BEN FARGHER: I cannot underscore enough the potentially devastating impact that this announcement today and the prolonged drought will have on regional communities and the irrigation sector, the farm sector, in this country.

PETA DONALD: Ben Fargher is the Chief Executive of the National Farmers Federation. He says the situation is serious for the 55,000 farmers in the Murray-Darling basin - responsible for 40 per cent of Australia's agricultural production. He's particularly concerned for those who rely most on irrigation.

BEN FARGHER: But if you are a tree cropper, and you lose that tree, be it stone fruit, grapes, avocadoes, almonds, to name just a few, not an exhaustive list, it may well take you five, six, seven years to rebound. And there is so much infrastructure in regional communities that rely on those industries.

PETA DONALD: The Opposition argues the Federal Government could have done more earlier.

ANTHONY ALBANESE: This water crisis has not occurred overnight. The water crisis has developed over a number of years, and it shouldn't have taken an election year to get action from the Howard Government.

PETA DONALD: Labor's water spokesman Anthony Albanese says the Government took 10 years to form the national water initiative, and more than half its two-billion dollar fund remains unspent.

ANTHONY ALBANESE: It's been clear for a long time that out water supplies have been over-allocated, and yet the Government is yet to purchase any of that over-allocated water, to put it back into the system.

It's quite clear that the complacency of the Howard Government - dominated as it is by climate sceptics - has meant that the pressure has got to the point whereby we now face what is quite extreme action, due to the water supply shortages for our agricultural communities.

PETA DONALD: The Prime Minister - who now calls himself a climate change realist - is playing down the possible link between drought and global warming.

JOHN HOWARD: We've had very severe drought before, but we had smaller populations and we had lesser demand ... look, I recognise the ongoing debate about the link between the two things. And I don't really, I don't vary from that, I don't think this dramatically alters it.

I mean, we're practical people, we Australians, and we've got to deal with the situation. And I would have thought what people ought to do is focus on what we can do to make sure that the available water does, is used efficiently.

PETER CAVE: Prime Minister John Howard.