For eighty years after the first settlement was formed in Sydney every aspect of administration in New South Wales was centered on Sydney. As a result of the passing of the Municipalities Act in 1867, settlements where there were a minimum population of 1,000 people within an area of ten square miles (2,560 hectares) could be formed into a Borough Council with elected local representatives who were granted limited authority over local affairs. These “Boroughs” subsequently became known as “Municipalities” and by the early 1900’s there was considerable pressure to extend Local Government to the rural areas.
In 1906 the Local Government Act was proclaimed. This Act delegated a wide range of activities to Local Government as well as making provision for the establishment of 134 “Shires” covering the whole of the rural areas of the state with the exception of the western lands which were, and still are, very sparsely settled.
The Government Gazette of May 16, 1906 proclaimed the Shire of Lockhart. The boundaries of the Shire as proclaimed were almost identical with those of Lockhart Shire in 1988. Only very small changes have been made to adjust minor problem areas. This Gazette also announced the appointment of five men to act as Provisional Councillors until an election could be held. They were Walter Day and W.D. Drummond of Lockhart, E. Lynch of Milbrulong, J.B. Martin of The Rock and C.R. Smith of Mittagong.