Newcastle has become the second council to turn down a push to not accept advertising or sponsorship from or to coal, oil and gas companies.
The request came through a motion put up by Greens councillor John Mackenzie at Tuesday's council meeting. It stems from climate advocacy group Comms Declare's fossil fuel ad ban campaign, which includes a letter from 200 health professionals detailing the "hazardous" impact of fossil fuels on health.
Six other councils around Australia supported the same motion, with Woollahra in Sydney's east being the only other yet to turn it down.
Labor councillors argued it was not relevant as the city did not accept advertising or sponsorship from fossil fuel companies, with councillor Margaret Wood saying it was a "strawman" argument.
"It's a motion about a problem that doesn't actually exist," she said.
A note from the city's acting strategy and engagement director, which was ultimately adopted as the motion, said no private advertising was accepted on council billboards and that council had received grants from the Port of Newcastle and the NSW Government's Resources for Regions program.
Labor deputy lord mayor Declan Clausen said he was concerned as grants and sponsorships were "interconnected" and spoken about together.
Liberal councillor Jenny Barrie said the idea amounted to "discrimination" against local employers.
"What comes out next?" she said. "It could be hairdressing, it could be 'they use too many foils'."
Lord mayor Nuatali Nelmes said council needed to be "respectful" of local industries. She said the idea was a "donut motion that's going around the country with the Greens at different councils" where it might be more relevant.
However it has received unanimous support at other councils, including the Labor-majority Inner West.
The two Newcastle Greens councillors argued the concept was symbolic and about "social licence". They said it showed the city was serious about climate action.
"Calling this an act of discrimination I don't think is the correct term for talking about the urgent need that we have to transition," councillor Charlotte McCabe said.
"We are clearly talking about only fossil fuel companies and the Port of Newcastle is not a fossil fuel company... the NSW government and Resources for Regions is not a fossil fuel company.
"Even if we're not currently using our billboards for advertising, this is an extremely important gesture... It makes a difference."
Cr Mackenzie said grants and sponsorships were differentiated in council policies, which were unanimously passed, and grants were not part of the motion.
"The fact that we don't have much in the way of sponsorship or advertising deals with fossil fuel companies is precisely the reason why it's so straight forward to accept this," he said.
"When we passed a motion not to allow wildlife trading at the City of Newcastle, there was no risk there was wildlife trading going on.
"There are many issues that are raised in our socially harmful activities [in council's sponsorship policy] that were never a risk in Newcastle, but we stated that we would not allow them to be part of the work that we support or endorse, because it's important to make those social stances on issues that are important."
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