The council has called for cross-party support for an inquiry into why the NSW Government failed to prosecute Ridgelands Resources for failing to comply with a condition of consent to establish a $5 million community fund which the company and the government kept secret for nearly five years.

The condition in a 2013 agreement with the government was only revealed in July, 2017 when Ridgelands made an unsolicited offer of $500,000 to Muswellbrook Council and the council initiated Supreme Court action to recover the full $5 million.

The council’s call for an urgent inquiry comes two days after Ridgelands walked away from a meeting with the council and community representatives to finalise projects under the fund.

It also comes only three weeks before Ridgelands’ five year exploration licence over the Wybong land expires, and as the company seeks to renew the licence.

Muswellbrook mayor Martin Rush said the council had written to each party holding seats in the NSW Upper House, and had received some preliminary support, for an urgent parliamentary inquiry into the secret deal and why the NSW Government failed to enforce the condition of consent, or prosecute the company, for five years.

An inquiry should also ask what the minister for resources and energy knew and when, and dealings between the Department of Planning and Ridgelands, including any promises or indications made by the department to renew the Ridgelands licence, Mr Rush said.

The 2013 agreement required Ridgelands to establish a community fund “as soon as reasonably practical” after the exploration licence was granted in February, 2013 and to publicise the fund and guidelines to community groups about how to apply for grants. It also required Ridgelands to provide detailed and regular updates on money spent over the five years of the fund to the minister and department.

When the secret deal was revealed former Wybong resident and former Muswellbrook councillor Christine Phelps described it as “the NSW Government and the mining industry in cahoots again to shaft the community”.

Mr Rush said Ridgelands representatives on Wednesday declined to approve any projects for funding after giving community groups one week to apply for grants in November, and deferred any further meeting until April. The five-year exploration licence with the condition for $5 million to be spent during that time expires on February 26.

Mr Rush said an attempt by the council and two community representatives to hold a meeting next week to finalise funded projects was vetoed by Ridgelands.

“Ridgelands has written the fund rules to give it a veto over every aspect of the fund’s operation and has set a date of April for the next meeting, with no guarantee that it will consider projects on that date either,” Mr Rush said.

“The community is in this position because the State Government has failed to regulate Ridgelands for more than five years. The Minister for Resources and Energy has been on notice of this issue since at least November last year.

“It is utterly reprehensible that Ridgelands Coal has been allowed to set up a community fund in such a way that it can essentially defeat the condition of its licence by exercising a veto on every decision it doesn’t like.”

NSW Greens planning and Hunter spokesperson David Shoebridge said the planning system in NSW pretended to regulate mining developments but “when push comes to shove there’s no one in the NSW government that has the guts or resources to take on the mining industry”.

“Time after time conditions on developments that are meant to serve the community or protect the environment are just ignored by the mining industry. They act as though they are above the law, and the fact is, most of the time they are,” Mr Shoebridge said.

Upper House Opposition leader and shadow resources minister Adam Searle said Labor will pursue a parliamentary inquiry into the Ridgelands case which is “a very serious issue of non-compliance with a condition placed on a mining company and an unexplained failure by regulators to enforce it”.

“It threatens the integrity of the whole system of mining conditions. When did mining companies get to pick and choose which lawful conditions to meet?” Mr Searle said.

“No explanation for this has come from the Berejiklian Government. Absent a satisfactory explanation, Labor will pursue a Parliamentary inquiry into these issues.”

Hunter Shooters, Fishers and Farmers spokesman John Preston said resources being exploited “belong to the people of NSW and we expect nothing other than full compliance with all agreements and conditions of exploration and mining”.

“These resources can only be dug up and sold once. A deal is a deal,” Mr Preston said.

“The people of the Hunter pay a heavy price for operating mines and whilst we support the mining industry, our first duty is to the people of the Hunter” who receive “a pittance” of the money paid to the state in royalties, he said.

Ridgelands was contacted for comment.

The NSW Department of Planning and the NSW Department of Resources and Energy were contacted for comment. In August, 2017 the Department of Planning said it had referred the Ridgelands case to the NSW Resources Regulator after Muswellbrook Council initiated its Supreme Court action.