He said it was unfair that Queanbeyan Council received more than $700,000 in Tuesday's Federal Government giveaway to local governments, and Tasmania whose population is only 100,000 more than the ACT's received $8 million, compared with the $2million allocated to the ACT.

''Just on a straight pro rata basis ... it doesn't take Einstein to work out that a community across the border which on one level is an extension of the ACT, with a population the same as Gungahlin or Weston Creek, receives $721,000, whereas the entire ACT receives $2 million from the same pot. How do you explain that?''

Mr Stanhope said he was already the unofficial mayor of Canberra, especially since taking on the Territory and Municipal Services portfolio two weeks ago.

As the ACT was a member of the Australian Local Government Association, he said it was already a municipality, to an extent.

''I could have myself designated mayor of Canberra, and on one level I am.''

Mr Stanhope said the Government might need to do more to emphasise that it provided the same services as a city council.

''I don't think anything formal is required of us [to be recognised as a local government], but it may be appropriate that in our description of the services we provide and the nature of our governance we be a little bit clearer about that.

''On one level I think it is highly efficient that there are only two levels of government to contend with here, but it does in meetings such as [Tuesday's] present issues where there is no mayor, there are no local councillors, and where we're not readily identified as a municipal government; and I think it does create some issues in how to identify us or categorise us.''

NSW grants commissioner and former Queanbeyan mayor Frank Pangallo sided with Mr Stanhope, agreeing the ACT had been short-changed in Tuesday's funding allocation.

''The fact that Canberra is technically not a local government is neither here nor there and based on the population of the ACT I would have expected Canberra to have gotten $7million to $8million,'' Mr Pangallo said.

''I think on this occasion the ACT has been short-changed.

''There's a technical issue there whether Canberra can be considered a local government, but in Canberra all the functions of local government are undertaken by the ACT Government, and therefore I think there is justification for that point of view.''

Mr Stanhope said the Government would go through a formal process to identify a capital works project on which to spend the $2million.

One of the projects listed in the Labor-Greens agreement signed after the election was not out of the question.