Minister for Water, Property and Housing Melinda Pavey is hoping the raising of Wyangala Dam's wall can be fast-tracked and under tender in two and a half years.
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The Minister made the statement while visiting the dam with Member for Cootamundra, Steph Cooke and Cowra Council Mayor, Bill West.
Mrs Pavey said the project had stacked up economically and the next step was to consult with the community.
"We've got a lot of work to do to get this project to finalization," she said.
"The first part of that is communicating with the public. This is going to have an impact and we need to be front and center explaining that impact and time frames.
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"I've already had conversations with the federal member, who quite handily is also the deputy prime minister, to ensure we get Environmental Impact Statements and environmental approvals done at the same time," she said.
Mrs Pavey said the project would support communities for years to come.
"This is to serve the generations, this is what a modern nation can do, what gives it the foundations for its economy," she said.
"The Lachlan Valley is one of the most productive in NSW and it will grow with the doubling of capacity of Wyangala Dam.
"That is something the whole nation will benefit from, it will rain in the future, the drought is hurting but we need to plan for a better more vibrant future for the people of regional NSW."
Member for Cootamundra, Steph Cooke, agreed saying she would make sure stakeholder's concerns would be listened to.
"We will make sure any landholders that are effected are treated respectfully and they know exactly what is going on," she said.
"Their main concern is they want to be involved in consultation, to know what it's going to mean for them and the future of the property. We'll make sure they have a seat at that table.
"We will make sure that landholders and other stakeholders and community members are absolutely consulted as we work through this business case process," she said.
Cowra Council Mayor, Bill West, said council was looking forward to the consultation process.
"At the end of the day the government's intent is clear and I think it's very much supported that we need to have water security for the Lachlan Valley," he said
"Not just for the current drought which is focusing our mind. But for the farmers, community, industry, economic growth and development into the future and to drought-proof as much as we can.
"It's exciting news, it's welcome news and council looks forward to working with the minister, the departments and our local member to make sure this comes to fruition having gone through all that public consultation process.
"There are issues to address but I'm very confident the community will be 100 per cent behind this development.
"You can't fully drought-proof but you can increase the capacity to withstand drought to make sure that this region grows," he said.
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