The amalgamated council of Cootamundra-Gundagai will not be demerged, despite years of passionate advocacy from the community.
The decision has been slammed by Duty MLC for Cootamundra and Shadow Minister for regional NSW Mick Veitch.
Local government minister Shelley Hancock announced on Tuesday that the boundaries of the two council areas would remain in place.
The former Gundagai and Cootamundra Shire councils were forcefully amalgamated in May of 2016.
Ever since, communities have called for a demerger to take place.
Ms Hancock enlisted the Boundaries Commission to examine proposals to demerger the LGA in February 2020. The commission held public hearings in each town and compiled a report with their findings and recommendations for the minister, which was only revealed to the public on Tuesday.
"The reports do not provide a clear consensus on the issue of demerging and do not provide me with the necessary confidence to make these important decisions," Ms Hancock said when announcing her decision that both councils remain merged.
"This provides both councils with certainty and a plan for the future."
Ms Hancock has also announced a independent statutory review into the Boundaries Commission itself, examining "the effectiveness of the membership composition", as well as the commissions functions and processes.
NSW Labor has also condemned Ms Hancock's decision, with Shadow Minister for Local Government Greg Warren saying the government has "used every excuse under the sun as to why these councils shouldn't be allowed to demerge."
Duty MLC for Cootamundra and Shadow Minister for regional NSW, Mick Veitch, said that both communities are "distraught".
"There was a glimmer of light at the end of a long and dark tunnel when the (boundaries commission) was asked to look into the demergers," he said.
"However today's announcement is a terrible slight on all of the communities in these two council areas. They should be provided with an opportunity to chart their own destiny."
Labor urge deputy premier to stand for communities
Shadow Minister for Local Government, Greg Warren MP, urged the Deputy Premier to double down and join forced with NSW Labor and the communities of Cootamundra, Gundagai and Snowy Valleys.
"The communities of Snowy Valleys and Cootamundra-Gundagai must be allowed to hold a referendum into a demerger - it the logical step for both communities," Mr Warren said.
"That is NSW Labor's position, it is the position of both those communities and I would urge the Deputy Premier to make his position too.
"Those communities - not Minister Hancock - should determine their future, and it's time the Deputy Premier made that crystal clear."
Shadow Minster for Regional NSW and Cootamundra Duty MLC, Mick Veitch MLC, said the time for talk from the Deputy Premier was over.
"These communities are demanding action not just words from all political representatives," he said.
"If the Deputy Premier is genuine about his wishes to allow a demerger to occur, he must make a stand against Minister Hancock and her NSW Liberal colleagues and join NSW Labor in the push for a referendum.
"The Deputy Premier must put people before politics."
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