Dubbo deputy mayor Ben Shields said he "didn't want our young people killing themselves" because they did not feel included in the community.
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Cr Shields made the comments at council's Finance and Policy Committee meeting, following speeches by Nicholas Steepe and Libby McMahon calling for Dubbo's Social Plan to be more inclusive.
"It is time Dubbo City Council officially backed our local LGBTI (Lesbian, Gay, Bisexual, Transgender and Intersex) community and embraced them as a very valuable and important members of our community," Cr Shields said.
Cr Shields introduced a recommendation for a LGBTI representative to be included on council's Community Services Committee, currently comprised of the mayor, two councillors, representatives of organisations such as the RSL sub branch and Housing NSW, and members of the public.
Councillor Lyn Griffiths made a similar recommendation to have the term 'non-hetrosexual' replaced with 'Lesbian, Gay, Transexual, Bisexual and Intersex' in the 2015/16 Dubbo Social Plan.
She said it was terrible to think people had self harmed and considered suicide because they felt that they were not a valued member of society.
"At the end of the day I have a son who is gay and I have a daughter who is left handed. And they were born that way.
"In years gone by my left handed daughter would have been discriminated against. She would not have been able to work in a bank. She would not have been able to get a job with the government, but now times have changed and we have seen the light."
Cr Shields said there had been a breakdown in communication between the LGBTI community and council, but it was not a result of homophobia, bigotry or even nastiness.
"I vigorously refuse any suggestion or allegation of widespread homophobia within the Dubbo City Council organisation. I also refute that our mayor is homophobic," Cr Shields said.
"I'm very very happy to write a list of all mayor Dickerson's faults for all to see but being homophobia is not on that list because he's not."
He said the inclusion of a LGBTI representative in the Community Services Committee would not lead to instantaneous results.
"I do however suspect that in time the committee and its new representative will work through these issues with the local LGBTI community.
"In time with proper community consultation and detailed policy analysis the Dubbo City Council will be able to address some of the major wellbeing and health issues that have such a major dramatic and urgent affect on the LGBTI community."
LGTBIQA advocate Nicholas Steepe said the changes were a step in the right direction and showed council was listening to the LGBTIQA community, however he said there was still more that needed to be done.