Dungowan Dam a billion-dollar project, reveals Tamworth Mayor

The cost of the 22-gigalitre dam has been an extremely closely-guarded secret since the completion of the project's business case in February.

The government ignored both an order from NSW Parliament requiring the release of the project's final business case and a motion from Tamworth Regional Council this week asking for more information.

But water minister Kevin Anderson and Deputy Prime Minister Barnaby Joyce revealed on Friday that the project could cost more than a billion dollars, more than double its original $484 million budget.

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Mr Joyce clarified that the Commonwealth would contribute $675 million on its part alone.

Mr Anderson later said that figure represented half the cost of the dam scheme.

"It's a 50-50 split. So the federal government has very kindly offered 50 (per cent), the state government will match that 50 and that will be the project that will be delivered to Tamworth to provide water security," he said.

"It's something that we need, we don't want to be where we were two years ago where this city looked like a lunar landscape and people were carrying buckets to water their lawns."

When it was originally announced by Prime Minister Scott Morrison in 2019, the fast-tracked Dungowan project was initially slated to cost the taxpayer $484 million.

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Each government was to pick up half of the tab for the new dam.

Rumours have flown ever since about a supposed blow out in the budget.

Mr Anderson confessed that the price had gone up, in February, after taking over as water minister in late 2021.

The build cost is significant due to the likelihood that Water NSW will attempt to recover the cost of the project through higher water rates on the residents and businesses of the Peel Valley. The federal contribution to the project does not need to be paid back.

Cr Webb let the cat out of the bag on Friday at a press conference announcing the completion of council works on the Global Gateway Park industrial estate.

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"At this point in time we're seeing the federal government committing at this stage, 600-odd million dollars to the project, we're seeing the state government doing the same," he said.

"For the residents of the city, it's not about what it's going to cost it's about the security of water, it's about our future.

"They're the figures that I understand have been committed, over $600 million from the feds."

Deputy Prime Minister Barnaby Joyce then clarified that the budget was $675 million from the Commonwealth alone.

He said the budget was "up to" that amount.

"We're prepared to put $675 million towards this and if we lose the election, you're going to lose the money," he said.

"Let's not make ourselves our own worst enemy. Because if you lose the money, I can tell you right now, I've been around this game for a long time, it'll disappear into another project somewhere else in some other corner and you'll be just left here saying 'if only'. It's not coming back! If the money goes, the money's gone, that's it."

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Mr Anderson said the billion-plus bill was a worthwhile investment to guarantee the water security of Tamworth.

"There's still negotiations around the cost of, who's going to build it and they are commercial-in-confidence in terms of that tender process," he said.

"I am confident that we will see a project that the community will absolutely embrace, it will create thousands of jobs."

To explain the budget blow-out, Mr Anderson said any engineer would admit it's expensive to move dirt.

The project's environmental impact statement, which will contain information about the scheme including its official final budget, is due to be released in the middle of the year.

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