The RFS pumped 10,000 megalitres out of the Golspie Road storage on yesterday and today in an effort to ease pressure on the dam wall. It was drained into Woolshed Creek from which the town draws its supply.

Upper Lachlan Shire Council and emergency service called an urgent meeting in the town's Memorial Hall on Monday night to explain the potential danger.

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Council general manager Colleen Worthy said it followed a draft engineer's report that found leaks and erosion in the structure that had been occurring for some years.

"...While failure was not imminent, there was a risk of it occurring in the future and if a breach happened it could cause substantial damage to the properties below the dam," she said of the report's findings.

Twelve to 14 properties, including a childcare centre, were at risk in the event of a major storm. Mrs Worthy said there was no evacuation plan in place for them.

The council received the draft report on Friday and early this week contacted the Regional Emergency Management Officer to help with an evacuation plan. An emergency operations centre was also set up at the council chambers.

Mrs Worthy said it took time to "make sure everyone (including RFS, NSW Fire and Rescue and SES) was on the right page." The council only issued a press release at 4.45pm Tuesday informing the community of the public meeting at 7pm that night.

However emergency services did letterbox drop and door-knocked residents on Tuesday afternoon. The council also contacted villagers.

Meeting attendants were told the engineer had recommended lowering the full dam to 30 per cent capacity to reduce the chance of failure and the impact if that occurred.

Mrs Worthy said some people were angry at the meeting and worried about inundation of their properties but "many" said the leaks had been occurring for years and were understanding.

"There will be water restrictions (as a result) of lowering the water level but we want to make them as easy and palatable as possible," she said.

"If people modify their water use just a little, it is doable."

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The council will soon release further details on restrictions, aimed at keeping the stream-fed dam at 30pc.

"The weather man is predicting a wet summer and for me that would be perfect because it would allow us to keep the water in that," Mrs Worthy said.

She told The Post there were back-ups, such as bores, a holding tank and hardstands that could supply water but the council would have to plan for a scenario whereby the creek ran dry.

The GM said the council had known about the dam leaks and erosion since July/August when a consultant's report was completed. However it did not know the full impact of erosion on the dam wall and the dangers if it failed.

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At that point it lowered its level to 60pc to reduce pressure. The council also contacted the Dam Safety Committee, which recommended appointing the specialist engineer. It was this report on which it was acting this week.

The document is expected to be finalised this week, with copies to be provided to the Dam Safety Committee, other state agencies, and the SES.

As for long-term solutions, Mrs Worthy said there were two choices: empty and repair the existing one or build a new structure. Investigations are underway into both in conjunction with state agencies.

Goulburn MP Wendy Tuckerman was an apology for the meeting due to parliamentary commitments. However Mrs Worthy said the State had been "nothing but supportive" of the challenges.

Asked whether the council had failed to properly maintain its infrastructure, she said no local government organisation across NSW had "true asset management in the way it should be done."

"We're an incredibly diverse business and in smaller councils it's even harder because you're crossing 8000 square kilometres with even less resources because of your rate base," she said.

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"...So it's really difficult to say how much you put into assets. Without looking back we're doing assessments on all of those things to have a future plan."

For now she said the council was concentrating on the areas of greatest priority.

Mrs Worthy pledged to keep the Taralga community informed.

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