Cootamundra Gundagai demerger: Residents may have to carry the cost but Snowy Valley residents may not

There may be no first mover advantage in the Cootamundra Gundagai Regional Council demerger but in adjoining Snowy Valleys, new laws could mean the State Government picks up the tab.

Cootamundra Gundagai Regional Council.

Cootamundra Gundagai residents may have to cough up at least $2.5m to fund their council’s divorce, but those who live under the adjoining Snowy Valleys Council will probably not.

Under State Government laws passed last year, merged councils could receive up to $5m to off-set the financial impacts of separation.

But the Cootamundra Gundagai demerger got the tick before the new laws were passed in May.

The council first received official demerger approval in August 2022. At the time there was no legal precedent in NSW to guide the process.

A subsequent change of government in March 2023 further delayed the process.

Cootamindra-Gundagai Regional Council Mayor Abb McAlister.

Cootamundra Gundagai Mayor Abb McAlister says his council always knew funding support was not on the table.

“It’s still worth doing regardless, otherwise we were only going to continue to lose money,” Cr McAlister said.

Minister Ron Hoenig. Picture: NewsWire / Flavio Brancaleone

“We hope that down the track we may get some government funding to assist us but this has been the right decision for our council and our residents.”

Losses accumulated by his council over the last nine years were an estimated $44m as a result of the shotgun wedding. While the rate base of the new larger council increased, so did expenses.

The cost of demerging is estimated at $2.5m – $3m. In written submissions some residents said they’d welcome an increase in rates if the NSW Government was not forthcoming with financial support.

Neighbouring council Snowy Valleys, however, may receive funding support to split.

Cootamundra Gundagai residents may have to cough up at least $2.5m to fund their council’s divorce. Picture: NewsWire / Nicholas Eagar

Under the new rules, the Minister for Local Government can make a loan or grant of up to $5 million to cover separation costs.

In a submission to the Local Government Boundaries Commission, Snowy Valleys Council said its financial position had deteriorated significantly in the years following the merger.

“SVC cannot continue operating as it does at present,” according to the submission, adding that community anger over the merger was severely impacting council staff.

The submission called on the government to bear the full cost of separation because it would “be morally wrong for victims of poor decision-making in 2016 to be required to pay for

subsequent boundary reversals”.

In October 2023 Local Government Minister Ron Hoenig voiced his commitment to demergers. Six months later the government announced the introduction of new legislation to provide a clearer legal pathway for the process.

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Originally published as Cootamundra Gundagai demerger: Residents may have to carry the cost but Snowy Valley residents may not