The brown, foul-smelling water in the regional New South Wales town of Yass could have a clearer, cleaner future, with Labor's state and federal branches pledging $5 million each to fix the problem — granted they win the next elections.

Key points: NSW and Federal Labor promise $5 million each to fix the dirty drinking water in the town of Yass if they win the elections

NSW and Federal Labor promise $5 million each to fix the dirty drinking water in the town of Yass if they win the elections Yass Mayor Rowena Abbey says the NSW Government told her they would fund the whole $11 million project if they won, but they stopped short of confirming this

Yass Mayor Rowena Abbey says the NSW Government told her they would fund the whole $11 million project if they won, but they stopped short of confirming this Member for Eden-Monaro Mike Kelly says residents are sick of the discoloured, smelly water

But according to Yass mayor Rowena Abbey the town's drinking water will almost certainly improve regardless of the state's election result, saying she had a commitment from the NSW Liberal Government to fund the entire $11 million project.

In a statement, the NSW Government indicated it would offer funding to fix the problem, but stopped short of promising the full amount.

Earlier this week the ABC reported that some Yass residents believed the water was making them sick, despite repeated advice from the Yass Valley Council and health experts that the town water was safe to drink.

Labor Member for Eden-Monaro Mike Kelly said the community had been "loud and clear" about their water woes, describing it as "quite a matter of concern."

"With the town continually growing … it's important we step up now and provide council with the backup they need," he said.

He said, should the federal Labor party win the election in May, it would provide $5 million to the council to build a water treatment facility.

Dirty water impacting hospital treatment, machinery

Member for Eden Monaro Mike Kelly says Yass residents have been heard 'loud and clear'. ( ABC News: Matt Roberts )

Mr Kelly would not be drawn on claims that the water was unsafe, but said consumer confidence was at stake.

"No-one is going to want to come here or stay here if they have questions over the water," he said.

"It has got implications for dialysis treatment at hospitals.

"So whether or not you're getting poisoned by the water, there are issues about the effect the water is having on processed machinery and health treatments, so we do have to solve this problem."

Mr Kelly said the underlying cause of the problem was climate change, with extended heatwaves and a lack of rain — an issue that had further implications for the region than dirty water.

"We definitely have to take action there," he said.

"Half of the Monaro economy is the ski industry at $2 million. If we lost that snow, which is happening steadily, that economy falls apart, so we've got work to do."

'Washing machines collapsing, dryer filters breaking'

Ursula Stephens, NSW Labor candidate for the seat of Goulburn, said there had been an alarming amount of angst and concern among small businesses in Yass.

"I think people don't understand the mineral content of the water and what it's actually doing," she said.

"People are telling us their commercial machinery such as dishwashing, is being affected … we've had domestic reports of washing machines collapsing, filters in dryers breaking.

"When you apply that to large infrastructure, such as pumps, being affected, that's when you understand the significance of the problem and importance of actually getting this in place."

Ms Stephens said Thursday's announcement was partly due to community concern, while taking advantage of being in an election period.

When asked if the worsening effects of climate change could mean more regional towns would have to consider importing bottled water into the future, she said she was "not prepared to accept that environmental catastrophe".

"Because bottled water itself is an environmental catastrophe," she added.

"There are many small-scale treatment plans we can do for regional towns, and many more efficiency measures we can take. We have a long way to go before we start talking bottled water."

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'A win-win'

Yass mayor Rowena Abbey praised the funding promise.

In a Labor press conference about the funding, she added that the NSW Liberal Government had called her today to also pledge $11 million for the whole treatment plant if they won the election.

"Both the state Liberal government [promising to] fund the whole project, and both Labor state and federal funding combining to fund the project, is a great win for our community, a fantastic result," she said.

"If we had a state Liberal win, we will get that funded, if we have a mixture, we will still be working with whoever gets in to ensure we actually get those funds to deliver the project that both sides of parliament have committed to, which is is a win-win for our community."

But Member for Goulburn Pru Goward did not confirm whether it would cough up money for the whole project.

"In December last year the NSW Liberals and Nationals provided $1.2 million in funding to enable the Yass Valley Council to develop a business case for this project," Ms Goward wrote in a statement.

"Once the business case is finalised, we will make funding available from the NSW Liberals and Nationals flagship $1 billion Safe and Secure Water infrastructure program."