Puff, the routes in NSW are not subsidised but regulated. The NSW Govt isn't saving money...mostly it is about service levels offered by applicants and community support etc. I think Brindi offered three flights/day vs. QF two for example. This appeals to the council etc etc. I think Brindi offered QF FF points so QF club members could use the QF SYD facilities and collect FF points.
The drought and other factors always play a part in pax loads as well as reliability of course.