Deputy Premier Paul Toole has accused City of Newcastle of hindering progress on getting sand back on Stockton Beach by its refusal to take responsibility for a vital offshore dredging program.
While there is general agreement that the project is the most suitable long term solution for renourishing the beach, the camps remain at loggerheads over who should hold the mining licence.
The council insists the government take ownership of the project and develop a state-wide approach to sustainable sand nourishment to assist all NSW councils.
But the government argues that it cannot apply for the licence, due to a conflict of interest because it is also the mining regulator.
The ongoing impasse between the council and the government has resulted in costs and timelines for the project blowing out considerably.
Mr Toole, who chairs the Deputy Premier's Stockton Taskforce said on Tuesday that he had made it clear to the council that the government would not hold the licence.
"I believe the council should hold the mining lease and I have made that clear in the meetings that we have had. I haven't moved from that position," he said.
"Whilst the council is stopping the project from going ahead, it is actually the community that is suffering from this impasse that we are seeing being played out."
A City of Newcastle spokeswoman said the council supported the state government's application on the basis that the Hunter and Central Coast Development Corporation would undertake the project management services for the sand nourishment as part of the grant.
This includes the work to obtain all remaining licences and approvals for the project, as outlined in the state government's grant application.
"It is appropriate that the NSW Government be tangibly involved in a solution for Stockton Beach, as it is their infrastructure, namely the breakwater and deepwater navigation channel of the Port of Newcastle, that has been proven as the primary cause of ongoing erosion," she said."
"It is also the state government that actually owns Stockton Beach. City of Newcastle is merely the Crown Land manager of the government's land.
"It is therefore both logical and appropriate that the proponent of the dredging and placement of sand nourishment (the state government) determines the planning pathway and holds all associated dredging approvals. This is in line with the process nominated by the state government's successful grant application."
The spokeswoman said the council had progressed the sand placement design work and anticipated having the associated environmental approvals finalised over the next few months.
"Once the NSW Government confirm funding and a sand source, Stockton will be ready to receive the sand," she said.
The council has also progressed the development of the Extended Stockton Coastal Management Program (CMP), which extends north to the LGA boundary, and builds on the 2020 Stockton CMP.
"City of Newcastle is in the final stages of drafting the management actions to be outlined in the Extended CMP, which will soon be circulated to community representatives and state agencies for further comment," the spokeswoman said.
"City of Newcastle calls on the NSW government to commit funds to see these actions delivered, to offset the impact of the government-owned port infrastructure, on Stockton's coastline."
Lord Mayor Nuatali Nelmes met with Planning Minister Anthony Roberts late last year in an attempt to resolve the mining licence issue. She said the minister was supportive of a government agency becoming the project's proponent.
Mr Toole reiterated that the state government would continue to work productively with the council.
"At the end of the day we all want the same outcome that is around resolving the issues around erosion at Stockton Beach. This is certainly a very important issue for the community," he said.
"The NSW Government remains committed to working with the council and the community to achieve that outcome. I have had a number of meetings with the committee over the past 12 months in relation to steps going forward.
"Ultimately though it is the council that is responsible for the project, the procurement and the delivery. We hope that they can see sooner rather than later that they are holding the process up on behalf of the community."
Labor leader Chris Minns has previously said he supports offshore dredging in principle. He is due to unveil details of the party's plans for the beach before the March election.
Mr Toole also said he was also working to restore the Port of Newcastle's ability to dump dredged sand off Stockton Beach.
The port's licence to deposit the sand was revoked because it was no longer a public authority.
Mr Toole said he was keen to rectify the issue.
"If it's happened in the past why can't it continue? We need to work with the Port of Newcastle to ensure that that process can occur again," he said.
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