Councils fear that a decision to set a threshold criterion of "sufficient scale and capacity" for councils in deciding whether they are "fit for the future" will inevitably mean they will be forced into mergers.

The chair of the Independent Pricing and Regulatory Tribunal, Peter Boxall, told the first day of public consultations on IPART's methodology for assessing the local government sector that he was still deciding whether to set a numerical target on population as part of the threshold test.

Only two councils are open to amalgamating with neighbouring councils.

A population target over 100,000 would force a raft of councils into considering mergers or risk being deemed unfit. Findings of "not fit for the future" throughout the sector would dramatically strengthen the Baird government's hand in moving to forced amalgamations.

A survey by the Herald found that only two Sydney councils were in favour or amalgamation, with most strenuously opposed.