newy.com.au – The NSW Government will retain the existing formula for allocating federal grants to councils, dropping a proposal that Newcastle and Lake Macquarie councils estimated would cost them a combined $193 million over 10 years.
The Local Government Grants Commission wrote to Newcastle Lord Mayor Gavin Morris and Lake Macquarie Mayor Adam Shultz on Friday to advise that the current allocation method would remain. Shultz said the changes had been due to take effect on 1 July 2027.
Financial Assistance Grants help councils pay for services and infrastructure. They are funded by the Australian Government and distributed through the NSW Government on the commission’s recommendations. The money is not tied to particular projects, leaving councils free to spend it on local priorities.
The commission had proposed a new formula comparing the estimated cost of delivering council services with each council’s ability to raise money from rates, fees and other grants. Household incomes and land values would have helped determine revenue capacity, while factors including population and remoteness would have been used to estimate service costs. The model would have directed more funding to councils assessed as having the greatest gap between their spending needs and their ability to raise revenue.
Both councils passed unanimous resolutions opposing the proposal. They said it would shift funding away from councils whose ratepayers the state government assessed as having a greater capacity to pay higher rates.
Newcastle’s figures showed its annual allocation would have fallen from $15.5 million to $6.1 million, a reduction of $9.4 million. The council estimated its total loss over 10 years at $108 million.
Lake Macquarie said its annual funding would have dropped from $21 million to $13.8 million, a reduction of $7.2 million. It projected an $85 million loss over a decade.
Morris said Newcastle used the federal grants to support roads and community services. He said he had raised the proposed cuts with Premier Chris Minns and credited him with stopping the change.
“The Premier has taken action and I thank him for putting a stop to these funding cuts.”
The councils’ figures also showed proposed annual reductions of $20 million for Central Coast Council and $5 million for MidCoast Council. Morris acknowledged both councils’ opposition, alongside Lake Macquarie’s, and support from Muswellbrook Mayor Jeff Drayton.
Shultz described the decision as “a big relief” and said it gave Lake Macquarie funding certainty.
“The key principle of our advocacy was that no council should be worse off.”
He said Lake Macquarie had sought transitional arrangements for any redistribution of funding. He thanked local state MPs and the United Services Union for backing the council’s position.
