Forced council amalgamations in Sydney will push ahead, announced the NSW government this week, but amalgamations in regional areas will be abandoned.

NSW Premier Gladys Berejiklian.

The government's merger policy has been a controversial one and this week's decision effectively splits NSW in two, with Greens MP and local government spokesperson David Shoebridge criticising the move as "one rule for the city and one rule for the bush".  

Essentially, all 20 amalgamations in Sydney will stay on course and the remaining five merger proposals will proceed, subject to the decision of the courts. Meanwhile, the six pending proposals for regional councils, including the merger of Shellharbour and Wollongong councils as well as Newcastle and Port Stephens Councils, will not proceed.

To date, 44 councils have been replaced with 19 larger ones and are currently led by administrators until the September council elections.

Premier Gladys Berejiklian justified the decision by noting that what works in Sydney, may not work in the country.

"Whilst there have been a number of significant improvements in merged regional councils, we accept that a one size fits all model does not always apply outside Sydney," Berejiklian said.

"The financial benefits over the next 20 years will be six times greater in the Sydney councils than those in regional areas."

Deputy Premier John Barilaro added that the government is committed to listening and delivering for the communities across regional NSW.

"Local councils in the bush have done their fair share to contribute to stronger local government in NSW, and today we draw a line under local government amalgamations in the regions," Barilaro said.

"This decision has been made to ensure that we put an end to the confusion and uncertainty for those councils locked in drawn-out legal battles."

A political compromise

Local Government NSW (LGNSW) president Keith Rhoades said the announcement was clearly a political compromise, and like most compromises, was likely to leave a great many people dissatisfied.

"The diametrically opposed positions staked out by National Party leader John Barilaro and Liberal Party backbenchers left the Premier in a very difficult position," Rhoades said.

"People are asking why the government has made a distinction between metropolitan and regional councils, and why the city councils don't deserve the same treatment as their country cousins. The only people really able to answer that question are the Premier and the Minister for Local Government."

He also said the compromise announcement failed to deliver certainty for any metropolitan communities opposed to forced amalgamation. 

"The government has said it won't change its approach in the city, leaving the decision up to the courts," Rhoades said. 

"I doubt that will satisfy communities such as Woollahra, Hunters Hill, Mosman and North Sydney - all traditional Liberal Party heartlands, and all strongholds of opposition to forced amalgamation with their neighbours.

"And for the sector as a whole, today's decision will simply create further bitterness. It's a lost opportunity to further draw a line under the disruption and upheaval of the past two years. 

"But most importantly, it will delay progress on the real issues facing all councils - amalgamated or otherwise - financial sustainability, stronger governance and greater capability in local government."