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NSW Premier Gladys Berejiklian has called on her interstate counterparts to "put things into perspective", noting COVID-19 cases, hospitalisations and deaths will decline in a world of high vaccination coverage.
And while the disease won't be eliminated entirely and will become endemic, the damage caused by a "COVID zero" approach will ultimately outweigh the benefits.
NSW reported a record 1288 new locally acquired cases in the 24 hours to 8pm on Wednesday, as well as seven deaths.
These include a man in his 50s, two people in their 70s and four people in their 80s, taking the death toll for the 11 week NSW outbreak to 107.
Ms Berejiklian also announced on Thursday that people living in Sydney's 12 local government hotspots would be allowed unlimited daily exercise, rather than the one hour per day current permitted. However, the 9pm to 5am overnight curfew will remain.
The minor easing is because NSW has doled out more than seven million jabs - reaching 70 per cent first-dose vaccination coverage - with double-dose coverage expected around mid-October.
This milestone will trigger a significant lifting of restrictions for the fully vaccinated, with further restored freedoms at 80 per cent coverage.
The government has flagged that at 70 per cent double-dose coverage, vaccinated people can expect to go out for a meal and attend public events.
With the virulent Delta strain of COVID-19 prompting extended lockdowns across NSW, Victoria and ACT, Ms Berejiklian reiterated that no Australian state or territory would remain COVID-free in the long term.
She said the most prudent course was to rapidly vaccinate the population against the virus and then re-establish Australia's connections with the world.
"Of course reducing the mortality rate and increasing vaccination is key, but we also have to put things into perspective," Ms Berejiklian said.
"The sad reality is outside of a pandemic, we lose between 600 and 800 people every year to the flu. We have to put things into perspective.
"Nobody likes to talk about this because it is confronting but we have to get back to living life as normally as possible, knowing that COVID is among us.
"At the moment there are eight million (NSW) citizens who do not have a choice in how they spend their free time, who do not have a choice about what they can do when they leave their homes.
"That is no way to live."
Meanwhile, a 104-unit apartment block in Sydney's inner west has been sent into a 14-day lockdown after four residents tested positive.
The Common Ground tower, managed by Mission Australia, houses many people who've experienced long-term homelessness.
Mission Australia CEO James Toomey said that residents who'd been homeless were more likely to be facing complex physical and mental health concerns, placing them at greater risk from the virus.
"Mission Australia is working alongside NSW Health, the Department of Communities and Justice and other tenancy support teams to provide support to tenants and staff and prevent further spread of the COVID-19 Delta strain," Mr Toomey said in a statement.
"Mission Australia has also offered contactless counselling, chaplaincy and other wellbeing support to tenants and staff."
The four positive cases and ten tenants identified as close contacts are being cared for off-site, Mission Australia said.
There are now 957 COVID-19 patients in NSW hospitals, with 160 people in intensive care and 64 ventilated. Despite union and healthcare worker concerns, the government insists the system won't collapse under the increased demand.
The system is predicted to come under the greatest strain next month as the number of COVID-19 cases from preceding weeks accumulates.
Treasurer Dominic Perrottet also announced an additional $3.9 billion in lockdown relief funding, including $1.5 billion from the federal government.
This will extend the NSW JobSaver program of employment subsidies for lockdown-affected businesses, as well as rent relief incentives, payroll tax reductions and deferrals, and grants to small businesses.
A new "hardship panel" will also be created to assess business relief applications that don't immediately qualify for NSW's COVID-19 grants.