The toilet will be a dedicated disability block at Harriman Point, at the southern end of Waranga Basin.
It was one of eight project across Victoria to be funded and will receive $343,630.
Federal Member for Nicholls Damian Drum said the construction of a dedicated disability toilet block was required, as existing facilities were outdated and prone to failure.
“Located just six kilometres from Rushworth, the area is a popular tourist spot, with around 500 people frequenting the site daily during the busy summer period,” Mr Drum said.
The replacement comes after toilet block, septic tank, dispersion lines and water supply at Harriman Point were deemed inappropriate for the public to use due to age.
Harriman Point is one of the busiest sections of Waranga Basin because it has a concrete boat ramp.
The mud brick toilet structure was previously covered with Colorbond to protect against weathering.
The interior walls show signs of decay, and the urinal, cubicles, doors and interior walls are of poor design and standard.
Campaspe Shire will deliver the project alongside Goulburn-Murray Water.
G-MW will lead the project delivery and manage the full extent of the works including contract specifications, procurement process/tender and reporting.
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