At a media briefing on Friday, Cr Gash and Mr Pigg, along with other Shoalhaven councillors and directors, said they needed further clarification before they could take a position in favour or against the proposed merger.

A key sticking point was the four-year freeze on rate increases that would be imposed on a merged council. 

Mr Pigg said the freeze effectively undid the strategy put forward by council to meet its Fit for the Future guidelines.

“Kiama and Shoalhaven in their 10 year financial projections for their Fit for the Future application that was assessed by IPART had an inbuilt projected rate increase in  later years,” Mr Pigg said.

“We had above rate pegging increases from 2017-18 for two years, 7.5 per cent above rate pegging in both those years, really to achieve a revenue stream to meet the criteria set by IPART and the government, particularly to meet the operating performance ratio and also give us enough revenue to renew infrastructure and the like.”

Unlike Wollongoing and Shellharbour, which had rate increases already approved before the merger process began, Shoalhaven and Kiama would have to get by on their current rates revenue.

“That’s got a serious outcome from a financial management point of view, Mr Pigg said.

While ratepayers might rejoice at having their rates frozen for four years, “the time they get to the fourth year and the fifth year there is quite a deep black hole of lost revenue opportunity and the merged council just won’t have the funds to provide the services or deal with that infrastructure need”, Mr Pigg said.

Another major concern was that a merged council would have two water utilities, Shoalhaven Water in the south and Sydney Water in the north. Both utilities operate under separate legislation and have no physical connectivity.

”There are very different pricing structures, there’s very different treatment of pensioner rebates, there’s differences for development.

You’ll end up with this two-tiered process of dealing with developers and a two tiered process of dealing with pensioners,” Mr Pigg said.

There will also be a two-tired rates system for the first four years.

The average residential rates in Kiama are 45 per cent higher than they are in Shoalhaven.

“That disparity will be locked in for four years,” Mr Pigg said.

Cr Gash said it would be an awkward arrangement.

“If you’ve got people in Kiama having better parks and gardens, which they do have because they’re paying extra rates, and compare it people across this side, who haven’t go it, how do you explain the inequity of those sort of things?” she said.

Despite these serious questions over the proposal, Cr Gash said she would not adopt a position until she had more information. 

“To come to a decision is a little early at this stage so I’m not going to forced into making a decision a decision as far as this council is concerned,” she said. 

A councillor briefing is planned for Tuesday, January 12. Cr Gash also wants the community to have its say but that might prove difficult given the timing of the merger announcement.

“The timing has been fair ordinary to say the least, the announcement days before Christmas and over this period,” Mr Pigg said.

“We know that our community consultative bodies basically close up shop through December and January - they don’t really get activated again until February.”

Mr Pigg urged every resident and ratepayer to visit the council website and read the discussion paper to inform their opinions.