A parliamentary steering committee has found 61 of the state's 139 local councils are unsustainable and that legislation may need to be introduced to force reform within the sector.
Local Government Minister John Castrilli has released the Local Government Reform Steering Committee's report on reforming the local government sector.
The committee said that most of the unsustainable councils had been unwilling to participate in the government's reform program.
It also found the voluntary reform process had not yielded the scope and scale of structural reform needed within the $2 billion industry.
"Without change, major capacity issues remain, resulting in lost opportunities for the state and communities," Mr Castrilli said.
He said the report articulated the gaps and opportunities for the high-growth areas of the state through increased economies of scale and removal of duplication, inconsistencies and fragmented decision making.
The committee's recommendations included targeted government intervention on major boundary adjustments, and introducing legislation to trigger reform.
It also recommended the appointment of an independent panel to review local government boundaries every eight years and cutting the number of counsellors to between six and nine.
"I am hopeful that following the release of this report more local governments will embrace the reform process," Mr Castrilli said.
