Ms Hancock was appearing before a budget estimates hearing on planning and environment issues on Monday when she was asked about Local Government Boundaries Commission reports on the two mergers.

Labor MLC Mark Buttigieg pointed to a dissenting opinion in the report on Cootamundra-Gundagai Regional Council that stated geographic barriers, internal disharmony and detrimental impacts on staff had "severely impeded the council's ability to operate in an effective and efficient manner".

"So how do you plan to change those pervasive negative attitudes of residents and ratepayers?" Mr Buttigieg asked.

Ms Hancock replied that the Office of Local Government had worked very closely with both Cootamundra-Gundagai and Snowy Valleys council because they faced challenges.

"Not only financial challenges but in particular with Cootamundra-Gundagai I think they are still very disappointed about the decision and that is probably to the detriment of the community," Ms Hancock said.

"I guess Snowy Valleys Council is slightly different, but I just think we have to move on; I have made the decision. That is why I am saying to you I do not really want to continue to comment and speculate about why I made a decision or did I talk to the community or what about staff morale.

"The decision is made-it had to be made. Yes, it took a little too long - six months to contemplate all of the issues - but I made the decision: there was no case that was presented to me clearly to demerge the councils. That is the end of it."

Gundagai Council in Exile spokesman Paul Mara said Ms Hancock was ignoring problems created by the merger of Cootamundra-Gundagai Regional Council.

"Like throughout this whole process, she has stuck her head in the sand, hasn't looked at the reality of the situation, and the government is digging a bigger and deeper hole for itself by not looking at the demerger situation," he said.

"Every council that has been merged is having major problems; does she think it's a great success to have a a more than than 50 per cent rate rise [in Cootamundra-Gundagai]?

The merger of the two councils has been a disaster. It's been a financial disaster and a disaster for the two towns and they've lost their identities. She ought to get real about it."

Dr Mara said a demerger was needed rather than financial assistance.

"Throwing more money is not going to solve the problem, she is trying to prop up a failure that doesn't work," he said.

Save Tumbarumba Shire's Neil Hamilton could not be contacted for comment.

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content: