The main argument in favour of bigger councils is that it increases "strategic capacity". The argument, advanced by Graham Sansom in his report, The Independent Local Government Reform Panel ( ILGRP), which informs the current debate, argues that councils are having to function in a much more complex world and face significant challenges in the future. They require higher calibre staff, deeper pockets and more co-ordination over larger regions to plan transport, deal with more complex developments and interact effectively with state and federal government. For example, the redevelopment of Parramatta Road now involves 10 councils and at least three state departments. Then there is the issue of efficiency savings. Some councils are extremely small – Hunters Hill is only 12,880 residents – which raises the question of whether this is an optimal use of a town hall, offices, staff and plant and equipment. Hunters Hill, along with Lane Cove and Ryde, has proposed an alternative solution, a joint regional organisation which would allow the individual councils to keep functioning, but lead to sharing of back-end services, including having a single regional plan. But critics of this approach say it will add just another layer of bureaucracy and do little to improve the calibre of council staff. The property industry also bemoans the complexity of dealing with multiple councils across Sydney. While efforts have been made to try to standardise terminology in local environment plans, a council boundary can make the difference of several floors. And some residents are very glad about that! Why are amalgamations a bad thing?

The strongest argument against amalgamations is that they lead to a diminution of representation for local communities. Some councils, such as Strathfield and Manly, are very connected to their communities. A population of 35,000-odd people might not be the most economically efficient, but the councillors know their communities. Recent research by the Australian Centre for Excellence in Local Government found that 75 per cent of Australians thought local government was the tier of government best able to make decisions about a local area, compared to 16 per cent for state and 2 per cent for federal. The report did not delve into what "local" meant in terms of council size, but it did try to tap into the extent to which people identified with a local area, including identification with its history, community and with friends. Councils which are resisting mergers most loudly are ones with a long history and a strong local identity. Among the most vociferous opponents are council areas where the borders give a certain cachet to their residents, such as Mosman or Hunters Hill. Others have long histories such as the city of Ryde, which traces its history back to 1841. Under the Sansom plan Ryde would be cut in two. Most councils have conducted polling of their residents and most have shown that residents support the status quo. But some of the polls have bordered on "push-polls" which did little to explain the alternatives and their potential benefits.

Are bigger councils more efficient than smaller ones? What does the evidence show? Surprisingly, it's a remarkably fact-free debate. The Sansom report did not provide detailed evidence on this issue. Research by Professor Brian Dollery, of the University of New England, and others published in the Institute of Public Administration's journal in January this year compared Brisbane City Council (population more than 1 million), with City of Sydney Council (population 200,000), and two clusters of south-east Queensland councils and NSW councils. The councils chosen were about 125,000 each. "Our financial analysis of BCC casts considerable doubts over the continuing mantra that bigger is better in the context of contemporary Australian local government," Dollery concluded. "We found that between 2008 and 2011 the three comparison groups consistently outperformed the BCC in the key areas of financial flexibility, liquidity, and debt-serving ability.

The Greens drew attention to OECD research which showed Sydney councils, on average, were already larger than many other local governments in OECD countries. Of course, it's very hard to make comparisons without knowing what local government does in each country. In the US, local government is responsible for running schools, police and courts system. In Australia it is confined to planning, some infrastructure and a grab bag of community services, from meals on wheels to childcare. What will happen to my rates? The impact on rates depends on whether your council area has higher land values than the neighbouring area and whether your council is run more efficiently than the neighbouring council. For example, Woollahra has higher land values than Randwick and Waverley but charges its residents a smaller percentage. If rates were charged at the same rate across the amalgamated council area based on land values, Woollahra residents can expect to pay more. Woollahra says this could be from 22 per cent to 53 per cent more. Needless to say, Woollahra residents are not happy. If there really are economies of scale in combining councils, then hopefully the savings will flow through to rates, but critics warn, efficiencies might be achieved only if services are cut.

What will happen to my services? Opponents of amalgamations warn local services tailored to the community are at risk in bigger councils. The argument goes that as councils become corporatised, they will cease to provide services that serve the particular needs of their area, and provide a more vanilla offering. For example, Holroyd, which has a very diverse population fears a merger with Parramatta City Council will lead to a focus on development and creation of a second CBD at the expense of social services. This is strongly denied by Parramatta. There will almost certainly be loss of jobs, rationalisation of libraries and waste services, but potentially these savings will result in less pressure on rates. What happened when City of Sydney merged with South Sydney in 2004? City of Sydney which absorbed South Sydney in 2004 argues in its submission that the merger was disruptive and delivered very limited savings.

"Academic research supports the city's experience that there are no guaranteed cost savings following an amalgamation and no certainty that it will achieve better outcomes than other approaches to achieving economies of scale and strategic capability." It warns that the disruption as a council absorbs a merger can put at risk continuity and damage investment confidence. It says the savings from the merger proposed by the Sansom report to form a global eastern suburbs council would save $146 million over 10 years – or 54¢ per resident a week. A decline in construction activity of 1 per cent would have a negative economic impact of $300 million, it says. But from the viewpoint of South Sydney, the answer is probably positive as the city has very deep pockets and has brought good management to the entire area. What happens next?

The IPART will rule councils either fit or not fit for the future, based on their submissions either to voluntarily merge or improve their performance. The key criteria is scale and capacity and it remains to be seen how IPART applies this, and whether it is prepared to consider proposals for joint regional organisations as a halfway house. What is the cost? The government has put aside a package of up to $300 million to assist councils who merge also gain access to concessional borrowings. It sounds attractive but a number of councils, such as City of Sydney and Botany do not have significant borrowings.