Deputy Premier John Barilaro says the Hunter is "unlikely" to escape from lockdown this weekend even if new daily coronavirus case numbers fall to zero.
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Mr Barilaro said on Monday that the state's health advisers would recommend waiting out a 14-day incubation period from the date of the last positive case before the region emerged from stay-at-home orders.
The Hunter recorded two new cases in the 24 hours to 8pm Sunday, one in Toronto and another in East Branxton.
A second elderly male resident of the RFBI Hawkins Masonic Village aged care home at Edgeworth died of COVID-19 in hospital.
Mr Barilaro said he would announce the Hunter's lockdown fate on Thursday after crisis cabinet weighed health advice against the government's desire to reopen areas as soon as safely possible.
"It's a fair assumption it's unlikely we'd reopen the Hunter," he said.
Mr Barilaro said he would prefer to see a 14-day or 28-day extension to lockdowns rather than week-to-week decisions which gave the community little opportunity to plan for the future.
The government's criteria for reopening regions include an absence of virus traces in sewage, zero cases and no positive tests in adjoining districts. The last round of sewage testing on August 18 showed high levels of the virus at Shortland, Morpeth, Farley and Edgeworth and detections at Burwood Beach, Raymond Terrace and Dora Creek.
Mr Barilaro again lauded Hunter New England Health's "admirable" response to the outbreak after cutting case numbers from 24 to two in 11 days.
"It might be the only jurisdiction possibly in the world that can get back to zero. No one's done that with delta," he said. "Hunter New England Health district is probably one of the best-performing networks I've seen in the regions in relation to this latest outbreak.
"Not only have they been able to manage their resources while also servicing other parts of the state like what occurred in Tamworth and Armidale and the case we had in Kempsey, but they were able to deal with the threat that was coming out of Newcastle and the Hunter region."
HNEH added only one new casual-contact exposure site on Monday, at an East Maitland pharmacy on August 12 and 13, but has now identified 700 close contacts from the Costco exposure site at Boolaroo last week.
A Sydney Costco worker who attended the company's new warehouse while infectious has spread the virus to five other people, at least two of whom are also from Sydney.
One of the two new Hunter cases announced on Monday was infectious while working at Costco last week. The other, in East Branxton, was in isolation during their infectious period.
HNEH said it was likely more cases would emerge from the Boolaroo site and ordered anyone who visited the Costco membership office or petrol station last week to get tested immediately and isolate.
Anyone identified as a casual contact and tested in recent days must take a second test and isolate while awaiting results.
"The risk associated with this venue has been reassessed following the new information we have received, which is why we are requesting casual contacts have an additional test," the health service said.
HNEH public health controller Dr David Durrheim said on Monday that the Costco incident had caused contact tracers "a lot of trouble over the weekend".
"This is clearly a high-transmission setting, a cool indoor environment that was crowded, and unfortunately with multiple people up from Greater Sydney.
"This is really a disturbing, worrying trend where we get introductions from Sydney.
"We're getting repeated introductions from Sydney. This needs to stop.
"We need to take action to make sure no one travels up the M1 and that we use local employees."
NSW reported 818 new cases in the 24 hours to 8pm on Sunday and three deaths. The death toll from the latest outbreak is 74.
The state has 586 COVID-19 patients in hospital, 100 in intensive care and 32 on ventilators.
No one in intensive care is fully vaccinated.
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