The millions needed to save Stockton Beach should be taken from coal royalties, NSW Coastal Alliance convenor Pat Aiken has argued.
Mr Aiken also believes the cost of ongoing beach renourishment should be included in the annual operating budget for Newcastle Harbour.
"Successive state governments have sat back and watched this disaster unfold over decades," he said.
"The government is collecting hundreds of millions of dollars in revenue in royalities from ships using the harbour. Is it unreasonable that some of that money is used to repair the damage that the breakwall is causing?"
The Coastal Alliance is made up of dozens of community networks that are fighting battles on numerous fronts with the state government over coastal erosion.
Mr Aiken said he feared Stockton residents would be drawn into lengthy legal battles, similar to those that have occurred at Belongil Beach at Byron Bay, for the costs associated with damage that they didn't cause.
"We are on the brink of losing whole communities, while they (state government ministers) wring their hands and talk about all of the infrastructure they are building in Sydney. Aren't our beaches some of our most valuable infrastructure. They are spending a billion dollars to build a new stadium but they won't fix Stockton Beach," Mr Aiken said.
The state government announced in 2016 that it had established a $83 million fund to address coastal erosion, but the majority of the fund remains unused.
All agree much more is needed to tackle the scale of the problem.
Mr Aiken, who lives on the south coast, said he had watched Stockton change dramatically over 40 years.
"I first stayed at the caravan park about 40 years ago when I was working on a shutdown at the steelworks.There was huge dune system between the caravan park and the beach," he said.
"I just hope that something can be done before it's too late. Surely they have to save the suburb first and then start replenishing the beach. There's plenty of sand in Lake Macquarie that could be dumped 100 metres offshore."
