newy.com.au – Newcastle and Lake Macquarie councils are urging the NSW Government to pause proposed grant changes they say would cost them a combined $16.6 million a year and put pressure on services and infrastructure.
The two councils have joined Central Coast and MidCoast councils in opposing changes proposed for 2027. Together, the four estimate their annual funding would fall by $41.6 million, with losses reaching $485 million over a decade.
The dispute concerns how Commonwealth-funded Financial Assistance Grants are distributed through the NSW Government. According to the councils, the NSW Grants Commission proposes shifting money to councils whose residents are considered less able to afford higher rates.
Under the councils’ projections, Newcastle’s annual allocation would fall from $15.5 million to $6.1 million, a reduction of more than 60 per cent. Lake Macquarie’s allocation would drop from $21 million to $13.8 million.
City of Newcastle chief executive Jeremy Bath said the changes would threaten services and infrastructure used by people across the region, not just Newcastle ratepayers. He pointed to facilities including the Civic Theatre, Newcastle Art Gallery, Newcastle Ocean Baths and Newcastle Museum.
“But robbing Peter to pay Paul isn’t a solution that makes councils sustainable. We need the State Government to hit the pause button on this and urgently rethink how it should be helping struggling regional councils,” Mr Bath said.
Lake Macquarie chief executive David Hughes said the city expected its population to grow by more than 50,000 people to reach 277,000 by 2066, increasing demand for roads, community facilities, sporting infrastructure and environmental management. He warned a recurring funding reduction would put significant pressure on the council’s ability to meet those needs.
The four councils also dispute how their capacity to raise revenue has been assessed. They say the calculations include emergency grants used to rebuild after natural disasters and levies collected on behalf of the NSW Government.
They also object to Newcastle Airport income being included in Newcastle’s assessment, arguing the airport is a separate legal entity whose income is entirely reinvested in airport operations.
Central Coast would face the largest annual reduction among the four councils, with its allocation falling from $32 million to $12 million. MidCoast’s funding would fall from $24 million to $19 million, according to the councils’ figures.
MidCoast general manager Adrian Panuccio said the council was still working through an estimated $320 million in damage to its roads and bridges from the May 2025 flood. He warned the proposed funding loss would force it to consider changes to services and reduce maintenance and repairs.
“This is not the type of loss that can be absorbed, we will have to look at reducing services and options for increasing costs. This is the last thing our community need to be facing,” Mr Panuccio said.
The councils say they support fairer funding for rural and regional communities but argue the overall funding pool should grow rather than money being moved between councils. They want the changes paused until a federal commitment to increase assistance grants has been implemented and the additional amount available to NSW is known.
newy.com.au understands the Grants Commission is continuing to review its funding methodology and consult councils, with no decision on future funding allocations yet made by the NSW Government.
