A super council formed from Dubbo City Council and two of its neighbours would capture $11 million cash from the state government.
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The offer is on the table for voluntary amalgamations until the end of June 2015 but its target recipients have shown no signs of taking it up.
Instead Dubbo council and its Orana region counterparts are pursuing a path that could see them come together to form a new co-operative arrangement.
Called Joint Organisations (JO), they are an alternative included in the NSW government's Fit for the Future package to reform the local government sector.
Local government minister Paul Toole has said more than one-third of the state's councils are facing financial problems - losing more than $1 million a day and that a strong sector is needed.
The government is offering $300,000 to groups of councils to pilot a joint organisation.
The step was considered at an earlier meeting of the Orana Regional Organisation of Councils (OROC).
Yesterday OROC chairman and Narromine Shire mayor Bill McAnally confirmed OROC had submitted an application to be a pilot JO by the deadline last week.
Regional councils that voluntarily merge would together receive up to $13.5 million in cash to spend as they wished, but Cr McAnally was not persuaded it was in his council's best interest.
"It's a little bit of a carrot, but at the end of the day it's not much money," he said.
Amalgamations in previous decades had not necessarily led to savings or better-run councils, he said.
The chairman said he thought "everyone realises there's got to be change" but no one in the area had "put their hand up to merge" and that OROC was pursuing the JO option.
He reported OROC members would meet with Mr Toole next month at one of two meetings held at Dubbo and in Sydney.
Cr McAnally said he understood there had been eight submissions and that four regions would be chosen to pilot a JO.
He was confident OROC could meet with success.
"We have the runs on the board as a ROC (Regional Organisation of Councils)," he said.
"I think we've put a great submission in and I'm confident we'll get a good hearing," he said.
Under Fit for the Future, if two councils opt to merge the new council would receive $5 million.
The sum would increase to $11 million for three regional councils merging and $13.5 million for four or more who come together.