The population of Albury-Wodonga could triple to 375,000 people in 20 years as part of a "regional deal" pilot with the federal government, worth millions of dollars.
Senator Bridget McKenzie announced the "bold vision" in her televised National Press Club speech, held in Wodonga on Wednesday.
"We've got to target and select regions and support strategic investment over the long term," she said.
"One of the barriers we need to address in growing our regions are the skills shortages that really do exist in so many parts of regional Australia.
"We don't just need people, we need the right skills in the right place."
The deal - supported by federal, state and local governments - would turn Albury-Wodonga into a "regional capital" and address the cross-border issues Senator McKenzie said were holding the Border back from population growth, such as trades and other occupations needing accreditation and licences on both sides of the border.
"The border will become immaterial, something that we drive over and say 'how nice is that river'," she said.
The initial funding will be $3.1 million for strategic planning, which Senator McKenzie said would be used to speak to councils and chambers of commerce to map out details of the deal.
Farrer MP Sussan Ley was in Wodonga for the announcement and said the Border had capacity to support triple the population.
"What we need is the infrastructure and the amenities for the communities that will come with this," she said.
She said she wanted to hear from small businesses about how the regional deal could help them.
The Regional Services Minister also used the NPC speech to make another big announcement: $160 million for two more rounds of mobile blackspot funding to improve what she said was a "lag" in coverage in remote areas, plus $60 million for a new regional connectivity program
"This is the first of its kind, delivering place-based connectivity solutions and a digital literacy program for those out in the regions," Senator McKenzie said.
"This program is designed to support regional communities to use cutting edge technology because the pace of change is just so fast."
Albury and Wodonga mayors Kevin Mack and Anna Speedie released a joint statement, welcoming the regional deal.
"We hope to make a real difference in not only harmonising cross-border business opportunities but also by identifying opportunities for investment," Cr Speedie said.
Indi MP Cathy McGowan also congratulated the three tiers of government for their collaboration.
"Our whole region, on both sides of the Border, will benefit from their vision," she said.
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