The federal government will maintain its drought relief policy of drawing "lines on the map" for $1 million council grants but will open a discretionary fund for areas that missed out.
Riverina MP and Deputy Prime Minister Michael McCormack traveled to The Rock on Saturday with Agriculture Minister Bridget McKenzie to announce that Lockhart Shire had qualified for a new round of drought assistance.
Mr McCormack said 122 councils had previously received drought funding, plus the additional six announced last week, under the drought community support program.
"Those councils have spent that money on upgrading memorial halls, on fixing up roundabouts, doing things not just in their larger towns but in the little villages to keep money generating in their communities, to keep employment in their communities," he said.
Mr McCormack said there was also a "discretionary $50 million set aside for those councils that may not qualify as far as rainfall and the amount of people directly employed in agriculture".
The selection criteria for councils to receive the $1 million has been criticised, with some drought-affected areas being just shy of the requirement to have 17 per cent of the workforce in agriculture.
"There has to be criteria and there has to be unfortunately or fortunately, whichever way you look at it, lines on a map drawn," Mr McCormack said.
Mr McCormack said the whole of NSW had been declared drought affected but there were some communities that were "reliant almost wholly and solely on agriculture".
"Many of those communities have not seen a drop of rain whereas other communities...there's a lot of hay there, there's still stock in the paddocks."
Lockhart Shire mayor Rodger Schirmer said the drought assistance was "another red letter day" for the shire.
"We have now received $1 million for help with the drought; we're not facing it as badly here but if we don't get rain it will turn into a very bad drought,"
"The Deputy PM tells me that we are going to receive and extra $1 million for Roads to Recovery (program) which will make a very big difference in our budget, and for that thank you very much."
Cr Schirmer said the money would make "big difference" to people in rural areas of the shire.
"Not only farmers, but people who are running businesses in smaller rural towns," he said.
"Farmers will face up to another year; unfortunately small shops that do it very tough close their doors and they don't often come back.
"So we are certainly going to give whatever help we can with this funding to everybody as equitably as possible."
Downside cattle, sheep, horse and Kelpie stud farmer Steve Condell welcomed the expanded scope of the drought assistance to include low-interest loans for businesses reliant on agriculture and funding for schools and childcare.
"I think that there are people who will get into livestock production if they can fund it. If they are cash strapped, and money's tight and the banks have shortened up a bit, I think that's where low interest loans are vital," he said.
"I think they're helpful, for sure. Nobody expects free money but if they can get back on their feet it has got to be helpful.
"It's cheaper to keep those good people in the industry, because if they leave they aren't coming back."