However, the 1350 megalitres a day application to Southern Rural Water is a variation on a previous application for 2700 ml which was refused by SRW, but is now before the Victorian Civil and Administrative Tribunal.

Plans for the Lake Condah Sustainable Development Project were released late last year with its proponent the Winda-Mara Aboriginal Corporation having already attracted 20 partners for the project including Timbercorp, Glenelg Shire Council and secondary colleges.

More than 60 other parties have expressed interest in the project, which is hoped to generate 150 jobs and add $130 million to the regional economy over the next decade.

Dr Builth said if the Macarthur licence was approved, it would spell the end for the project.

"There would be no water," she said.

Mr Saunders said it was an issue that involved the region.

"There are farmers opposed to the applications, and we are also opposed, in fact, we called for an adjournment of the hearings to enable a detailed submission be put to the relevant authorities," he said.

"There is zilch water in Lake Condah now, if a licence was granted for the amounts of water being talked about, not only would there be no water for the farmers, but the Lake Condah and aquaculture projects would be dead."

Mr Saunders said the Lake Condah Sustainable Development Project had to happen for the future of the region.

"We have to look at what we already have within the region and we need to expand on that, for example, just imagine the impact on the region's economy if Alcoa left, all the empty shops ...," he said.

"A healthy economy produces happy people, and we need that diversification, something in addition to companies like Alcoa."

Mr Jennings spent Wednesday in the lower south-west as part of a familiarisation tour in his new portfolio of Aboriginal Affairs.

He was shown the Lake Condah Mission and several sites on the Mount Eccles lava flow along Darlots Creek on private farming land.