Ray Longfellow has seen the dusty New South Wales outpost of Ivanhoe struggle through a lot of hard luck.

Key points: Ivanhoe correctional centre was opened in 1999 and employs 19 people out of Ivanhoe's 100–200 residents

Ivanhoe correctional centre was opened in 1999 and employs 19 people out of Ivanhoe's 100–200 residents It is set to close in mid-2020, with inmates to be relocated, and local residents fear it could mean the death of the town

It is set to close in mid-2020, with inmates to be relocated, and local residents fear it could mean the death of the town The State Government has said it will work with the local community to consider options for repurposing the facility, potentially providing further employment

But the town's postmaster, and a resident of more than 30 years, believes the very future of Ivanhoe has been put at stake by a State Government plan to shut its jail.

"It is going to have a devastating effect on the community," Mr Longfellow said.

Ivanhoe, with less than 200 residents, is essentially propped up by the jail.

The Ivanhoe Warakirri Correctional Centre employs 19 people, several of whom have families in the town, and at the moment holds 27 minimum-security inmates.

It is a lifeline for a town that lost its grocery store in recent years, and where the local RSL is staffed by volunteers desperate not to see their watering hole close down.

Ray Longfellow has lived in Ivanhoe for more than 30 years, most recently as the postmaster. ( ABC Rural: Saskia Mabin )

"It's an ageing community, and the main reason it's shrunk so much is the unavailability of work for young people," Mr Longfellow said.

The Government announced in late September the jail would be closed in mid-2020, with inmates to be shifted to more modern, fit-for-purpose beds elsewhere.

"It was disbelief, it was 'what are we going to do?'" gift-shop owner Meg Blomfield said.

Ms Blomfield, a former teacher, was immediately concerned about the effect the departure of families would have on Ivanhoe Central School.

"The school's the second-biggest employer in town, and if we can't have students, if one family leaves, we lose a teacher," she said.

Ms Blomfield knew the effect it would have on her own business.

"I would close, probably. I live on the borderline anyway," she said.

'I thought prison greens were the Ivanhoe school uniform'

Meg Blomfield would like to see the prison repurposed as an Aboriginal cultural centre. ( ABC Rural: Saskia Mabin )

It is not just the contribution to businesses that locals will miss — it is the civic contribution of the inmates.

They mow public and private lawns, clean and tidy the cemetery, paint murals, and last year resurfaced and refurbished the football oval.

Among the most significant services they provide is Meals on Wheels.

When she first arrived in town, Ms Blomfield was struck by the sight of prison greens.

"I thought it was the Ivanhoe school uniform … and I thought 'gee, they're big school kids'," she said.

"There'll be a lot of pensioners struggling because the jail people went and got the wood, things like that.

"It's a really big loss for the people who need community action."

'The beginning of the end'

Josh Robertson, who volunteers as a cook at the RSL, said he feared the town could cease to exist. ( ABC Rural: Saskia Mabin )

One of the many hats worn by Josh Robertson is cooking at the Ivanhoe RSL, which no longer has any paid staff.

The town can sustain both a small pub and the volunteer-run RSL — just.

It stared down closure about two years ago.

"It'd be good to see them both stay open, but if the club shuts I don't think it'd re-open again," Mr Robertson said.

"It'll just keep crawling and crawling further into a big hole."

Mr Longfellow, also the RSL club's president, shared that concern.

"I like to think that it will survive, but if the Correctional Centre goes, then it's going to lead to an exodus of people from the community," he said.

Mr Robertson believed the town could fade away if the jail closure went ahead.

"If it closes, it'll be the end of Ivanhoe," he said.

"It's the beginning of the end again."

The RSL club at Ivanhoe has been struggling to survive and is run entirely by volunteers. ( ABC Rural: Saskia Mabin )

Searching for a purpose

Ms Blomfield was just as outraged, but more optimistic.

"I can say that I was really shocked, but I'm over the shock now, and Ivanhoe will go on," she said.

"We just have to see what happens and hope that something useful will come of it."

Corrections Minister, Anthony Roberts, said he would be open to the centre being repurposed in a way that could continue to provide employment.

Ms Blomfield said she would like to see it used as a centre for Aboriginal arts and culture.

"Schools would be interested in coming to see that, I think," she said.

Barwon MP Roy Butler said there had been discussion about re-using the jail as a drug rehabilitation centre — a type of facility sorely lacking in the region.

"There are options on the table … it all comes down to what the community wants," he said.

Mr Butler said he was lobbying for the closure to be postponed, at least until the drought had broken.

"Taking that away during a time of extreme challenge anyway is just the wrong time to do it," he said.

Corrective Services to begin consultation

The jail was built after the railway hub closed in the late 1980s. ( ABC Rural: Saskia Mabin )

The Government said it would work with the local community to consider options for repurposing the facility.

"Initially, Corrective Services NSW (CSNSW) will consult with the Central Darling Shire Council to determine the best way for community engagement to occur," the department said in a statement.

"Staff [at the jail] will be asked to nominate whether they would like to move into another role within CSNSW or the broader Department of Communities and Justice, or take a voluntary redundancy."

It said inmates and staff would be better served at other facilities.