The Hunter Joint Organisation of Councils has engaged accounting firm Price Waterhouse Coopers to investigate how grants for rural road works have not kept pace with the cost of providing the service, while assessment guidelines for metropolitan roadworks have kept pace with costs.

The decision follows a Muswellbrook Shire Council briefing report to Hunter Councils showing the NSW Grants Commission’s method of distributing federal financial assistance grants, based on how much councils have previously spent on roads, disadvantages rural councils like Dungog with huge road commitments and a limited rate base. The disadvantage compounds as smaller councils receive less grant money and spend less over time.

A recent Hunter Councils meeting was told metropolitan councils have seen the cost base used to determine how much they receive increase by 57 per cent since 2011, while rural roads have only seen a 30 per cent rise.

“It is for this reason that discussions have been taking place for a considerable period of time in regard to the financial assistance grants funding methodology as interpreted by the NSW Grants Commission, and the degree to which smaller rural and regional councils are disadvantaged by the approach that Grants Commission employs,” Cessnock mayor and Hunter Joint Organisation of Councils chair Bob Pynsent said.

Hunter Councils cannot change how financial assistance grants are applied but “we can certainly show leadership in analysing the impact of the program and identify how refinements and local initiatives might lead to better outcomes for all our communities”, Cr Pynsent said.

The initiatives could include a voluntary redistribution of grants within the 10 councils in the region, he said.

In 2016/17 Dungog Council received $850,000 for roads funding under the financial assistance grants scheme and Muswellbrook Council received $868,000.

This compared with $2.6 million to Lake Macquarie, $1.74 million to Newcastle, $1.57 million to Cessnock, $1.25 million to Maitland, $1.8 million to Upper Hunter, $1.15 million to Port Stephens and $1.18 million to Singleton.

The Muswellbrook Shire Council briefing report said the combination of a large road network and a typically small rate base was a major factor impacting on the financial sustainability of rural and regional councils.

Current criteria for assessing roads funding did not take into account projects where the benefits could be felt beyond the funding council, such as Lake Macquarie’s Glendale interchange, and the need for additional roads funding to assist rapid growth such as in Port Stephens, Cessnock and Maitland.

The Hunter Councils decision was taken as five Dungog councillors and the shire’s general manager resigned following a tumultuous period that has included the negative impact of the NSW Government’s amalgamation process and significant financial concerns for the council.

Muswellbrook mayor Martin Rush said there was no doubt that roads funding for rural and regional councils had deteriorated as a proportion of total road funding in NSW over the past six or seven years.

“Local Government NSW along with a number of other organisations have been asking the government for some time now to conduct a review of the way the funding is distributed,” Cr Rush said.

“It’s a great shame that review hasn’t happened and it’s having a serious impact on the sustainability of councils like Dungog.

“Speaking personally, I think all councils in the Hunter have an obligation to ensure that the road network across the region is safe and sufficiently maintained.

“Muswellbrook Shire Council is very likely to contribute its share to any new funding model and I’m pleased that Hunter Councils is showing this leadership, notwithstanding the dithering by the State Government.”