A new irrigation scheme proposed for the inland north Queensland town of Hughenden is a step closer to reality with a site for a significant new dam now pinpointed.

Key points: The site for a dam near Hughenden has been earmarked at Saego Station

The site for a dam near Hughenden has been earmarked at Saego Station The dam will be part of the $300m Hughenden Irrigation Project

The dam will be part of the $300m Hughenden Irrigation Project HipCo board member Jeff Reid described the dam site as a "natural ring-tank"

About $180 million of the estimated $300 million cost of the scheme had already been promised by the Morrison Government, as part of a deal with Katter's Australian Party to guarantee supply during the last Parliament.

Federal Member for Kennedy Bob Katter, Senator Susan McDonald, and Assistant Minister for Road Safety and Freight Transport Scott Buchholz joined board members of Hughenden Irrigation Project Corporation (HIPCo) at a property north-west of the town to unveil a plaque marking the milestone.

But much more work will need to be done before the dam and associated infrastructure can be built at Saego, near the home of hay grower and HIPCo board member Jeff Reid.

"We've done exhaustive studies. We've looked at 20 different dam sites and we've come to one now," Mr Reid said.

"This one is a weir across the Flinders River with a channel leaving the weir to one side to an off-stream storage," he said.

Jeff Reid says his rhodes grass hay farm is proof of the potential for more irrigation in the district. ( ABC Rural: Tom Major )

Mr Reid described the chosen site as a "natural ring-tank" requiring closure on just one side of the four sides of the impoundment.

"We end up with 200,000 megalitres in this ring tank, the deepest point being 14 metres," he said.

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"After that we're going to have a pipe out of the ring-tank that is gravity fed to the farms, so the farmer is going to get water to his door without electricity."

HIPCo chairman Shane McCarthy said the process required a substantive business case to be prepared, which he anticipated would be completed by January.

"We've taken DERM [the Department of Environment and Resource Management] along for the ride and they've been very positive with us about the water sources … licences and that sort of stuff," Mr McCarthy said.

"The water is in reserve there available, but we've got to make sure we don't take too much out of the river and leave nothing for anybody else."

Favourable crops

Small-scale fodder production is already occurring in the district, with Mr Reid cutting 100 hectares of rhodes grass for hay.

"We're hoping after 30 years of studies and rhetoric that we're finally getting somewhere this time," he said.

"We've got a commitment from the Prime Minister that we're going to build this thing, we've stopped doing feasibility studies and we're actually going to start something."

The board of HIPCo said the dry climate of Hughenden, with an average rainfall of about 400 millimetres, was such that only 80,000 megalitres could be promised on a reliable basis.

Up to 10 megalitres per hectare would be needed in the long, hot summers of the district, meaning about 8,000 hectares would be able to be irrigated for crops.

Licences needed

For the scheme to progress, licences would need to be acquired by the irrigators from the State Government for water to be harvested from the Flinders River, Queensland's longest.

Other irrigation projects proposed downstream and environmental flows to the Gulf of Carpentaria rank as concerns for those sceptical about the proposal.

"Obviously the scheme has to buy [water permits], we're not asking for them for free," Mr Reid said.

"We think there's plenty of water allocated in the river we can take without environmentally damaging the river.

"The HIPCo scheme is looking for 1/60th or less than 2 per cent of the water in the Flinders catchment."

After three decades of debate about the irrigation project, Mr Reid said this funding package and proposal was the best chance of finally realising the proponents' vision.

"We want to do it — we don't want to be still wondering and dreaming and scheming in another 10 years' time," he said.

"That's why we've gone for the simplest, lowest-cost, easiest option. To us, we've ticked every box and to the government it seems to be a no-brainer."

Political pressure

Member for Kennedy Bob Katter, a long-time proponent of dam building in northern Australia, said he would maintain pressure on Federal and State Governments to follow through with the project.

"The time is right now to do great public works," he said.

Unveiling the plaque along with former senior public servant Sir Leo Hielscher, Mr Katter pointed to the administration of past State Governments as a model to repeat.

"There's not been a dam built in Queensland in 30 years, since Leo Hielscher and [Joh] Bjelke-Petersen left the stage," he said.

"You'll never see a better time — interest rates are almost zero, now is the time to do it."

State MP Robbie Katter said the community in Hughenden was "desperate" to see development to arrest the population slide in the township.

Mr Katter described the Saego Dam proposal as a conservative option designed to not give the government any reason to dismiss the proposal.

Sir Leo Hielscher and Kennedy MP Bob Katter, who both served under the Bjelke-Petersen Government in the 1980s, unveil the Hughendam dam plaque. ( ABC Rural: Tom Major )

"No-one seems to be very aspirational in the State Government anymore, particularly with the departments, you don't want to give them any reason to say no," he said.

"It's been wound down to something that's very doable and very compromising, something that would be very effective for the region.

"Cost per megalitre, I think it's down to $3,000 or $4,000 per megalitre, where you've got a lot of proposals up around $12,000 a megalitre to produce water out of a dam."

State Natural Resources Minister Anthony Lynham said Commonwealth money was welcome in Queensland, but he questioned the motives of the Morrison Government.

"We are always keen to see Federal money heading for Queensland — even if it was just to buy Bob Katter's vote," he said.

"My department is working with the Hughenden Irrigation Project Corporation on a number of issues including the amount of water the project is seeking.

"Any new water infrastructure project needs to stack up environmentally and economically."