Australia should have a national water strategy and a plan to protect coastal cities as rising sea levels threaten homes and businesses, the nation's independent infrastructure adviser says.
Infrastructure Australia has listed both initiatives among its top priorities for 2020.
It says this must include finding new water sources such as recycling, desalination plants and stormwater harvesting.
But Nationals leader Michael McCormack, who has ministerial responsibility for infrastructure, says his focus is on dams.
"Desal plants, fabulous, expensive water, IA has identified it, they have given it as a priority to government, but I want to build dams," he told Sky News on Wednesday.
"There are so many dam projects, they're going to build climate resilience, they're going to store water and they're going to grow agriculture."
He said supplying town water was up to state governments.
In a statement, the deputy prime minister also said the government has already committed to fund many of the "congestion-busting" initiatives debuting on the infrastructure body's list
Veteran federal MP Bob Katter dismissed the infrastructure body's report as stupid.
"Infrastructure Australia seriously wants desalination over dams and the Bradfield Scheme? What is wrong with these people?" he said, referring to a 1930s plan to divert water inland.
Infrastructure Australia's annual assessment has also stressed the need for infrastructure to be built in a way that ensures it can be resilient to the unprecedented risks posed by climate change, including higher temperatures, unpredictable seasonal rainfall and water availability, more extreme winds, and more extreme weather events and bushfire seasons.
The priority list was developed using more than 200 submissions from state and territory governments, industries and the community, along with the latest infrastructure audit data.
It lays out six new high priority projects and 17 new priority projects, all of which have a full business case.
It also adds as high priority initiatives securing town water supplies and the creation of a national water strategy to guide governments, the private sector and everyday Australians on efficiently capturing and using water.
Demand for water across many Australian systems is increasing due to population growth and relocation, rising agricultural demands and environmental and cultural needs.
The changing climate is also altering the water cycle, while land and forest management are leading to changes to run-off and evaporation.
The Australian Trucking Association and Roads Australia have been pleased with the priority list's focus on road maintenance.
The Civil Contractors Federation of South Australia was disappointed some of SA's worst roads were not among high priorities, while the Sydney Business Chamber said more infrastructure funding must be directed at helping its city keep up with population growth.
Labor infrastructure spokeswoman Catherine King has kept her focus on the government's $4 billion Urban Congestion Fund - designed to reduce traffic gridlock and remove bottlenecks - which she says is a "multi-billion dollar pork-barrelling exercise".
Australian Associated Press