Key report backs demerging of Snowy Valleys Council into Tumut and Tumbarumba Shires.

Report author and University of Newcastle local government economics professor Joseph Drew said the evidence clearly showed the councils would be better off demerged.

Professor Drew criticised previous work done by consultants on the merging of the councils in 2016 and said the report tested the main arguments for remaining amalgamated with "proper robust evidence".

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"What I found out is the three main things we were told have turned to be completely and absolutely wrong," he said.

Professor Drew looked into the idea that a bigger economy was better and found it was inaccurate when applied to the Snowy Valleys Council.

"There can be no reasonable doubt there was never any potential economies to scale for NSW local government. That is beyond dispute," he said.

He said what really impacted cost structure in local government was population density.

"When councils get amalgamated, houses don't suddenly jump up with joy and move, within a few metres of each other. They remain where they were," he said.

"That's why these savings haven't been made and ... my research... has shown on average that costs for the amalgamated councils went up by about 11 per cent when you control for all other factors."

Secondly, Professor Drew said merged councils were told they would all become more efficient.

"Given the savings were mostly going to happen because of the economies to scale, it's hardly surprising to find when we did the robust empirical work ... [we found council actually became less efficient]," he said.

Professor Drew also debunked the idea that small councils couldn't possibly be financially sustainable.

After undertaking more econometric analysis, he concluded that the reverse was true.

"As population density increased, financial sustainability actually decreased," he said.

Snowy Valleys mayor Ian Chaffey said the report confirmed what they already believed, that the merger was "structurally flawed."

Cr Chaffey said the fact council recently had to rely on a 36 per cent special rate variation also indicated the merger was not financially beneficial.

"At this point in time based on the professor's draft report, that [rate variation] won't be sufficient," he said.

"That in itself highlights the fact the merger hasn't yielded any of the so-called advantages that were supposed to flow from it."

He said there was also "no community of interest" between the two local government areas.

"The tyranny of distance also has a major impact on the viability [of the merger]," he said.

Looking ahead, the mayor said council could be in a position to consider a demerger sometime between now and June.

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