Council is eligible for a 39.8 per cent subsidy under the Country Towns Water Supply and Sewerage Program.

However, it would seem council has been penalised because it was given an additional $10M from the Federal government.

As a result the State government reduced its contribution by $4M.

In a letter to Primary Industries Minister Katrina Hodgkinson, Nambucca Shire Council mayor Cr Rhonda Hoban said council had struggled with the affordability of the project from the start.

Council had calculated typical residential bills and developer contributions showed that with some of the highest accounts and contributions in the State, this project would be unaffordable for a community with one of the lowest socio-economic bases in the State, Cr Hoban said.

“It was for this reason that council sought additional financial assistance from the Federal government, and it is my understanding that it was on these very grounds of affordability and our community’s capacity to pay that the Federal assistance was granted, she said.

“To now be advised that we are to lose $4M of that $10M grant to the advantage of the State is extremely disappointing and will be viewed by our community as cost shifting.

“Adding further to the burden placed on our ratepayers is the advice that State funding will not be available until July 2013.

“For the project to proceed council must borrow funds that will add an interest component to the over cost of the project.”