Deputy Premier John Barilaro was adamant on Monday that Wollongong would not be separated from the Greater Sydney region, despite Shellharbour's change to "regional" status.
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He said the permit system and Wollongong's connections to Sydney were the main reasons for the decision.
"With the initial permit system, there is a 50 kilometre buffer zone," he said.
"We drew the line at Wollongong because of it's high level of connectivity with Sydney.
"If we didn't draw the line we'd risk smaller communities, and it makes complete sense why we would make that decision."
Mr Barilaro said despite being designated regional, it was unlikely Shellharbour would come out of lockdown any time soon.
"Looking at the number of cases, the sewerage surveillance and cases in the neighbouring Local Government Areas of Wollongong and Kiama, it changes nothing about when the lockdown will lift," he said.
Mr Barilaro said those were the three criteria which would be applied to determine whether any LGA was released from lockdown restrictions, and flagged the possibility that if "only a handful" of LGAs met the criteria, the entire state would remain locked down.
He said the NSW Government would release more information about how those decisions would be made later this week, and also flagged the possibility of more support for business.
Mr Barilaro also acknowledged the government's decisions would not always reflect the health advice.
"NSW Health will always err on the side of caution," he said.
"But our job [in the Crisis Cabinet] is to balance that advice with business and mental health concerns."
818 new cases of transmission were recorded in the 24 hours to 8pm Sunday.
One of those was from Wollongong and one from Kiama. Both cases are isolating at home.
Investigations continue into the source of their infections, however, the Illawarra Shoalhaven Local Health District says they suspect the cases are linked to employment in Sydney.
Three people in their 80s died in that period. NSW Premier Gladys Berejiklian said all had underlying conditions.
She urged people to turn away from case numbers in favour of watching vaccination rates.
"Once we get to 80 per cent double dose, essentially we will have normalised COVID the way we treat other conditions," she said.
She said there would be "more to say" about a return to schools later this week given how close the 6 million vaccinations target had come.
Ms Berejiklian said 738,000 people were vaccinated in NSW during the past week.
"We're up to 5.9 million jabs in NSW," Ms Berejiklian said. "I'm so pleased everybody has really heard the call."
Monday delivered tighter NSW lockdown rules, including for the Hunter.
Masks are now mandatory outdoors in the region until August 28, the mooted expiry of the statewide lockdown.
Curfews have now come into force across Sydney's 12 local government areas of concern, with that city's lockdown not due to expire until the end of September at the earliest.
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