The chairperson of a parliamentary inquiry tasked with investigating the NSW water crisis said he thinks Australia needs to have a conversation about drinking recycled water.
Dozens of communities across the state endured months of highest-level water restrictions last year as much of NSW approached the brink of running out of drinking water.
A Legislative Assembly inquiry established last year to investigate the crisis "might" explore the issue of recycled drinking water, according to chairperson Justin Clancy.
"Given the precious nature of the water resource, we do need to embark on a conversation with our communities about how do we reutilise or how do we utilise water and including in that conversation recycling," he said.
Mr Clancy said any change would only happen in the "long term" and would need the "goodwill and support of the community" to be a success.
The Inquiry into Support for Drought-Affected Communities in New South Wales handed down its interim report last Thursday.
Among other findings, it recommended state government review what are considered onerous regulations on the use of recycled water for industrial uses like road construction.
But Tenterfield Shire Council started the conversation about recycled drinking water last year, beginning a local investigation of whether recycling could prove a solution for the town's then-severe water security crisis.
Mr Clancy, the Liberal Member for Albury, said in his personal view that was the best option for NSW - empowering local government with the option of taking the plunge.
"That would be my personal view would be to say if we can enable that local flexibility and adaptability I would be supportive of that," he said.
"As a local member I think certainly if we can empower communities to have that flexibility and if that's the right thing for that community then I'm certainly supportive of that."
A spokesperson for Tamworth Regional Council said that community acceptance had "proven to be an issue in other locations" and the debate should be led by higher governments.
The TRC spokesperson also said the cost of treating recycled water to a drinkable standard would be high, potentially driving up the cost to consumers.
Namoi Unlimited, a joint organisation that represents a group of local governments in the New England region, is currently conducting a community survey into recycled water.
But councils covered by the organisation including Tamworth Regional Council have had trouble getting approval even to use recycled water on road projects.
In a submission to the inquiry Namoi Unlimited said government should speed up and simplify the approvals process to allow councils to respond more quickly in a crisis.
The NSW Legislative Assembly Committee on Industry, Investment and Regional Development recommended the state government investigate reforming the process in its draft report issued last Thursday.
Government has until the end of the year to respond to the report.