At the strategy and assets meeting on Tuesday, May 12 the motion passed by seven votes to six.

The $300 payment was originally set to be funded through surplus funds from Shoalhaven Water, waste services, sewerage and a reduction in future capital works.

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But instead, council will borrow to fund the capital works as Cr Andrew Guile made an amendment to direct the CEO to borrow funds instead of reducing the capital works budget by $5 million.

"We adjusted what was going to be a capital saving to pay for the donations and make sure that it would be covered by finance," Cr Guile said.

"We've got a massive amount of headroom in our borrowing capacity in council and rates for borrowing at the moment are pretty good."

Originally the Shoalhaven Independents councillors had hoped to pass a rate reduction rather than gift money but Cr Mitchell Pakes said the Local Government Act was "strict" when it came to rate changes.

Mayor Amanda Findley tried to defer the motion to allow council to consider the Minister for Local Government's changes to rate variations.

The Mayor opposed the $300 payment arguing there were better ways the council could spend $17.5 million.

"I'm still shocked that councillors think this is economic stimulus when much of the money will head out of the region to ratepayers that don't live in the Shoalhaven and I think it is not equitable because it doesn't help those that rent," Cr Findley said.

"If $17.5 million had been spent on an employment package instead, we would have been about to give 108 people work for one year."

Cr Mitchell Pakes said the $300 donation was the least council could be doing to try to assist ratepayers.

"Is council's response unusual? Yes it is but these are unusual times," he said.

"We've never faced a crisis like this before and I think out response is measured.

"It's an opt in - opt out program, so if some community members think they don't need the assistance they don't have to apply for it."

Cr Joanna Gash voted against the payment and said the motion was "immature".

"For 17.5 million dollars to give everybody a $300 donation to me is very inappropriate, it's not financially sound," she said.

"[The community] would rather see our roads fixed, have more infrastructure taking place, more cycleways, more pathways rather than have a $300 bonus for people who may not even live in the area."