The Federal government will commit an additional $3 million to complete the final stage of the Charleston Dam project in the Etheridge Shire.
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Deputy Prime Minister Michael McCormack said the project would deliver a more reliable water supply to Georgetown and Forsayth.
"This particular project will be critical in supporting the local agricultural and clean energy industry and will help to build resilience to drought," Mr McCormack said.
The dam is located about 6km downstream of Forsayth and about 31km upstream of Georgetown on the Delaney River.
When completed, it will provide 100ML of water a year to Forsayth and 500ML to Georgetown plus a recreational area for locals and tourists.
Kennedy MP Bob Katter said he was relieved the government had agreed to fund the money to complete the dam.
"I want to thank the Federal Government for agreeing to fund this, and I'd also like to thank the last two Mayors there who have driven me personally crazy about getting this project up, and for good reason," Mr Katter said.
"Forsayth services Cobbold Gorge which is one of the leading tourism attractions in Queensland so this is a tremendous win not just for the residents of that town but also the future prosperity of a growing tourism region."
North Queensland-based LNP Senator Susan McDonald, said as well as drinking water the lake would also provide a recreation area.
The funding is in addition to $10 million provided to Etheridge Shire Council for the project and is subject to the council providing relevant documentation in accordance with program guidelines.
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