A new dam will be built in NSW. This is the Talbingo Dam in the Snowy Mountains. Picture: Rohan Thomson
A new dam will be built in NSW. This is the Talbingo Dam in the Snowy Mountains. Picture: Rohan Thomson

New dam to be built as part of $1b drought rescue plan

Bush towns running out of water in the state's worst ever drought will benefit from a $1 billion rescue package, which includes NSW's first new dam in three decades.

After weeks of speculation about a new dam to secure the long-term survival of country towns and farmers, The Sunday Telegraph can reveal a new reservoir will be built at Dungowan, near Tamworth.

Wyangala Dam in the state's Central West will also be expanded by 50 per cent.

Exactly when shovels will go in the ground will depend on the planning process, but the NSW government last week promised to declare new dams "critical state significant infrastructure" to prevent drawn-out - and potentially controversial - public hearings.

A new dam will be built in NSW. This is the Talbingo Dam in the Snowy Mountains on September 4 this year. Picture: Rohan Thomson
A new dam will be built in NSW. This is the Talbingo Dam in the Snowy Mountains on September 4 this year. Picture: Rohan Thomson

Prime Minister Scott Morrison said dams weren't built overnight but "we're working as quickly as possible".

"Our response to the ongoing drought impacting rural and regional communities is comprehensive and committed," Mr Morrison said.

"It deals with immediate needs for financial assistance and longer-term investments to build drought resilience for the future."

The state and federal governments will equally split the $1 billion bill for the new and expanded dams, after intense lobbying from Premier Gladys Berejiklian and Deputy Premier John Barilaro.

The federal government's $500 million contribution will free up funds for the state to build bores and pipelines to stop towns running dry in the short term.

Gladys Berejiklian and John Barilaro have successfully lobbied the federal government for drought relief. Picture: Hollie Adams
Gladys Berejiklian and John Barilaro have successfully lobbied the federal government for drought relief. Picture: Hollie Adams

The new Dungowan Dam above Tamworth will be worth $450 million and will secure long-term water supply for 62,000 district residents and farms in the Peel Valley, which is expected to run out of water by June without significant rainfall or intervention.

The new Dungowan Dam will be more than three-and-a-half times the size of the ­existing dam, which will be knocked down once the ­replacement is built downstream. It will be the first new dam in NSW since Split Rock dam was built near Tamworth in 1987.

Water levels are decreasing across the state, including at Warragamba Dam. Picture: Toby Zerna
Water levels are decreasing across the state, including at Warragamba Dam. Picture: Toby Zerna

The Wyangala Dam will be raised by 10m at a cost of $650 million, increasing its capacity by the equivalent of another Sydney Harbour.

Wyangala supplies water to 34,000 homes along the Lachlan River, including homes in Forbes and Cowra, a region forecast to run dry by March next year.

There will also be an initial $24 million for a business case into a 100,000 megalitre dam on the Mole River near the Queensland border.

Ms Berejiklian said dams were an important insurance policy against drought.