The town's Aborigines have been particularly hard hit because they rely heavily on the seasonal jobs provided by agriculture.
"It's had a major impact," said Alister Ferguson, Bourke's most senior Aboriginal representative. "Families have a lot less money to spend on food and their kids."
Even the local wildlife seems exhausted. Kangaroos lie panting on a lawn in front of an office building on the outskirts of town, and a pair of emus barely manage to break into a run when startled by the side of the road.
Farmers are selling their properties, and those that remain on the land are struggling to survive financially.
Without sufficient grazing, they have had to either sell all their sheep and cattle or buy in feed at great expense. Sixty sheep and cattle ranches in the Shire of Bourke – an area about the size of Denmark – now have no animals left at all.
Graham Brown, 58, who owns a 430,000 acre farm 190 miles west of Bourke, says it is the harshest drought he has experienced.
"Our dams [reservoirs] are depleted and we're running out of water. We're holding on by the skin of our teeth, but if we don't get any rain this summer, we'll be hitting the panic button," he said.
Bourke's population has dropped in the past three years from 3,500 to less than 3,000. Shops on the main street are boarded up and houses are for sale.
"This is the worst drought white men have seen," said mayor Wayne O'Mally. "It's really testing people's resources."
Scientists disagree with those government officials who see no connection between the drought and global climate change.
"It's still not certain whether the low rainfall is a result of global warming, but certainly the increased temperatures are directly linked," said David Jones, head of climate analysis at the Australian Bureau of Meteorology. "Global warming is making Australia hotter, which makes droughts more likely."
Water ecologist Peter Cullen, a board member of the National Water Commission, agreed that evidence points to the fact that Australia is getting drier as a result of global warming.
"I think there is a climate shift occurring with a drought on top of that," Professor Cullen said.