Forced amalgamations would kill small towns, according to Shadow Local Government Minister Peter Primrose.
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In October the Independent Pricing and Regulatory Tribunal (IPART) handed its report to the state government outlining which councils are "fit" or "unfit" to stand alone. While Dubbo City Council was declared fit, Narromine Shire and Wellington councils were not, and were recommended for an amalgamation.
However, Dubbo, Wellington and Narromine have all stood firm that they do not want to merge.
Mr Primrose said no one knew who would be forced to merge but doing so would be devastating in regional communities.
"It's a really bad thing for regional areas. What we're worried about is that it's just going to be the death of small towns," Mr Primrose said.
"If the council closes down people will say 'there's no reason for us to stay here'. If the bank then closes, they're going to start losing shops and the whole city's going to start closing."
A lot of civic buildings and council run areas like youth centres would also close, he said.
"This is going to hurt the bush. The city will survive it but it's really going to hurt the bush."
Mr Primrose said there had not been a single academic review that reinforced bigger councils would be better.
"If two councils are broke and you put them together, you're just going to get a bigger broke council. If you put an unfit council with a fit council, the fit council is going to have to take the brunt of the broke council's costs."
While there wasn't an awful lot Mr Primrose said he could do, he said the NSW government should be looking at the finances first.
"Local Government NSW, which is the primary body representing councils, found $520 million every year is cost shifted on to local councils from higher levels of government; federal government grants are frozen. There needs to be a proper review of their finances."
Mr Primrose said the secrecy around the process and the possible forced amalgamations had left a bad taste in everyone's mouth.
He said it was obvious the government would wait until after Christmas to reveal any information, when big city journalists would be on holidays.