How do we know raising the dam is about floodplain development?

Answer

The dam raising is being driven by developer interests on the Hawkesbury-Nepean floodplain. The NSW Government has stated in its principle document advocating the dam proposal that it plans to allow an additional 134,000 people to reside on western Sydney floodplains after the dam is raised.

Minister Ayres, the Minister for Western Sydney has himself said that he plans for future development across the low-lying Penrith floodplain "as far as the eye can see" in the coming years.

More (referenced) information on floodplain development can be found here.