The NSW government has refused to explain why it pulled out of talks to take over the provision of services to Jervis Bay Territory, as the Commonwealth government says it's looking at all options for future management.
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Meanwhile, the federal MP responsible for the region, Andrew Leigh, has also weighed in, saying residents deserve the same standard of services as those in Canberra.
The ACT government is responsible for the education, welfare and corrections services of nearly 400 residents over 200 kilometres away, as part of a legacy deal with the Commonwealth.
However questions have been raised about the sustainability of the arrangements, with people on bail and even a body left stranded in Canberra because of the way services are run.
Mr Leigh has been the federal representative for Jervis Bay for nine years, and said concerns over service provision have been an issue throughout that time.
"The unique circumstances of the Jervis Bay Territory have meant that the community has often had to deal with service approaches that are quite different from most Australians," Mr Leigh said.
“Jervis Bay is a close-knit community, and its residents have a right to expect at least the same level of service provision as people in NSW and the ACT."
The Department of Infrastructure, Regional Development and Cities is currently reviewing the deal, and said it was working with the ACT and NSW governments - as well as the Wreck Bay Aboriginal Community Council - to look at how services were working.
"The Department is committed to canvassing all options to ensure appropriate access to services for residents of the Jervis Bay Territory and visitors," a spokesperson said.
But questions remain as to why NSW withdrew from talks to take over the provision of some services in 2017.
The Commonwealth asked NSW in 2015 to look at the possibility of delivering those services in the territory.
A spokesman for the NSW Department of Premier and Cabinet would not explain what happened. When pressed, he said: "NSW and the Australian government were unable to agree on the service and sharing arrangements".
NSW also said it said not been approached about Jervis Bay Territory since walking away from talks.
The state does provide some services to Jervis Bay Territory residents, such as public hospitals and high school education. It recovers some costs from the Commonwealth for services.
NSW also provides community health services to residents on a cost-recovery basis.
However the split responsibilities have led to some "perverse outcomes", according to an external review of the arrangements obtained by The Canberra Times.
Legal Aid ACT also had to step in last year after NSW Legal Aid suddenly withdrew its services to Jervis Bay Territory, with the Commonwealth and the ACT unaware of the service gap until that happened.
Children are also "getting lost in the system" when they move between the ACT-run Jervis Bay Public School and NSW's Vincentia High School, with one teacher the reviewer spoke to blaming in part the differences between the two curriculums.
It's not the first time a review has found the arrangements to be unsatisfactory.
A 2014 report concluded the ACT was "not well-positioned to deliver state-type services to Jervis Bay Territory" due to the distance between the territories and the difficulties in achieving economies of scale.
The ACT government also maintains it is not "best placed" to look after Jervis Bay, and has been trying to get out of the arrangement since at least 2011.
Despite this, neither the Commonwealth or the NSW government would be drawn on whether they believed the current circumstances were acceptable.
