The majority of Shellharbour residents were slow to seek local government status until a group of impertinent individuals from Kiama scoffed at their efforts to become incorporated.
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Kiama had designs on Shellharbour being included within its own municipal boundaries and, at a meeting of interested parties on December 8, 1858, ignored a submission by John Graham that Shellharbour had just two days earlier resolved to seek its own municipality.
Mr Graham warned that if Kiama pressed ahead with its intention, he and his neighbours would get up a counter petition that might delay their efforts.
The cavalier attitude lit a fire in people's bellies, resulting in "the largest assemblage that ever met in Shellharbour" being held five days later, on December 13. Two sitting rooms of the Settlers' Arms and the verandah, where standing room could be obtained within earshot, were crowded with listeners, according to the Mercury.
Andrew McGill, of Terry's Meadow, was called to the chair before William Moles, of Macquarie River, moved that Shellharbour, Macquarie River and Stoney Creek be incorporated as a municipality.
Moles said the first meeting held to discuss the proposal attracted "small attendance" but "when their privileges were threatened by a faction, they had shown their public spirit by meeting in numbers that were gratifying". He warned they had to choose between taxing themselves or being taxed by their neighbours, "who had threatened to enslave them".
The resolution was carried unanimously while a petition of support containing 200 names was forwarded to the Government.
The Municipality of Shellharbour was proclaimed on June 4, 1859, the area to be bounded "on the south from the sea by the Minnamurra River to Terragong Swamp, and by the north side of that swamp", west to the source of the Macquarie Rivulet, and up to "the Illawarra Lake".
The first hustings was held at the rear of Robert Wilson's steam flour mill at Shellharbour on July 14 when 12 men were nominated for nine positions.
The election followed on July 22; elected were: Andrew McGill (71 votes), William Wilson (69), Patrick Collins (68), Ebenezer Russell (67), Robert Wilson (63), Robert Martin (61), Joseph Dunster (60), William James (59) and William Moles (56). The first meeting was held on July 29 in the Shellharbour schoolroom.
The municipality's first mayor, William Wilson, was unable to fulfil his term, resigning from the council in March 1860 after accepting a posting as Wesleyan minister at Grafton. Thomas Alexander Reddall was elected as a councillor in his place. Cr Moles stepped up as mayor.
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