NSW Grants Commission Abandons Controversial Council Funding Model

The NSW Grants Commission abandoned a proposed revised methodology for distributing Federal Assistance Grants to councils after receiving overwhelming opposition from local governments. The draft model, intended for the 2027 program, sought to redirect federal funding away from larger councils to support rural areas with limited rate-increasing capacity. However, 92 of the 102 councils that submitted feedback rejected the plan, with critics arguing the formula lacked transparency and created a zero-sum game.

Larger councils, including the City of Newcastle and Lake Macquarie City Council, argued the plan would cost them collectively $41.6 million annually. The City of Newcastle faced a nearly $10 million annual loss, while Lake Macquarie faced a $7.2 million cut. In the southern Riverina region, Greater Hume Council, Federation Council, and Lockhart Shire would have lost over $9 million combined. Upper Lachlan Shire Council faced a projected 45% funding drop of approximately $3.2 million.

Commission chair Linda Scott announced that the existing methodology will continue to apply until Commonwealth funding levels increase. She noted that only 10 of the 102 submissions supported the model. Lord Mayor Gavin Morris of Newcastle credited Premier Chris Minns for intervening to stop the cuts after direct meetings with local leadership. While the current system remains, Scott indicated the commission may revisit a revised model for the 2029-30 term if additional federal funding becomes available.