The world's largest financial advisory firm, Deloitte Touche Tohmatsu, has found that Cootamundra would be better off financially if it demerged from Gundagai next year.
Deloitte was engaged in July by the NSW Boundaries Commission to do provide financial advice on the demerger proposal.
The Commission this week released a preliminary summary of Deloitte's findings, which concluded that even after paying the full costs of de-amalgamation, Cootamundra could achieve an operating surplus of $1.2 million by 2015.
For the average ratepayer, this would mean a saving of $23 a year over the former shires remaining together.
By contrast, Gundagai would have an operating deficit of $1.5 million, meaning an average rate increase for Gundagai of $23.
Deloitte said its modelling was based on the councils having to pay a total one-off separation cost of $3 million.
This would include the costs of management and community engagement, computer systems, financial and legal advice, rebranding and staff retraining and minor redundancy.
The $3 million cost would be shared equally between the two former shires.
There would also be recurring costs of $200,000, to be shared equally.
In terms of the cost per ratepayer, the separation cost would be $375 in Cootamundra, and $617 in Gundagai.
Deloitte's forecasts are based on the CGRC's projections of there being 4005 ratepayers (or "rateable assessments") in Cootamundra and 2,430 in Gundagai in the financial year 2005.
Deloitte's de-amalgamation cost was significantly higher than the cost forecast by CGRC, of $1.75 million.
"Based on its analysis of available benchmarks, Deloitte estimated that one-off demerger costs could be in the range of $1.8m to $4.2m," Deloitte estimated.
"For the purpose of the analysis, Deloitte has assumed the mid-point of this range of $3.0m, and that each new council would fund its own share of costs."
Professor Joseph Drew, who helped CGRC prepare its submission to the Boundaries Commission, said his cost of $1.75 million had been arrived at after checking the figures several times.
"I was surprised at how cheaply it could be done," he said, "the main reason being that the former shires had kept all their equipment and there had not been significant changes in the staff structure."
An obvious point is that the financial positions of both former shires in 2025 could be much improved if the NSW government were to cover the cost of de-amalgamation.
Professor Drew, associate professor of public policy and local government at the University of Technology Sydney (UTS), says that if the Boundaries Commission recommends demerger, he believes the government should pay the cost.
"Although there may not be a legal precedent, there is a moral obligation because the government has damaged the communities," he said in an interview with the Herald in July.
"If I drove into your car, whether I had good intentions, whether I was listening to the back seat drivers who had no idea what they were doing, I've got to pay to fix it," he said.
"The state government was driving the car. They had lots of back seat drivers - KPMG, Ernst and Young, Graham Samson from the independent review panel, telling them all sorts of stuff and most of it was pretty poor advice as we've seen from the outcomes.
"They damaged the Cootamundra community and I think they're morally obliged to get you as close as possible to the situation you were in beforehand.
"People make mistakes with the best of intentions. Governments make mistakes. They got very bad advice, anyone could see that it was incredibly bad advice.
"The delegate who did your review was just appalling. If you've read his report some of the mistakes were just plainly ridiculous. "Is the government completely responsible? They probably just acted on advice but at the end of the day it was them that had to drive the car, and they drove it into Cootamundra."