Cash-strapped Tasmanian councils may have to amalgamate.

The financial stress on many local governments, made worse by the COVDI-19 pandemic, has seen renewed calls for the State Government to force some councils to merge. It currently has a policy of encouraging voluntary amalgamations.

Tasmanian councils have agreed to implement hardship packages, delaying rates collections and waiving or deferring fees, and to freeze rates for the 20/21 financial year.

However, some mayors say they felt forced into the measures, and they have put serious pressure on finances.

Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey says the State Government should reconsider its policy on council amalgamations.

“We've reached the stage where there are several councils across Tasmania who are really going to struggle to make it work, even in the medium term,” he said.

“It seems that amalgamating is the only way that we're going to get sensible local government in these areas.”

Tasmania has 29 councils for a population of just over 520,000. For comparison, Brisbane has just a single council for a population of 2.5 million.

Feasibility studies in previous have found that amalgamating councils would save millions of dollars in most areas.

Mr Bailey says it is time to stop asking.

“What we'll see here, if we're not careful, are councils not exactly amalgamating, but almost bankrupting,” he said.

“Rather than neighbouring councils standing around waiting for the keys to be handed to them, what I'd prefer to see is a more strategic approach.

“It makes a lot more sense for there to be strategy leading into these sorts of things rather than a collapse of a council, which I think we could genuinely be seeing in a couple of council areas across the state.”

Local Government Minister Mark Shelton says the Government is not changing its position just yet.

“Significant local government reforms stand the best chance of succeeding when processes are voluntary,” he said.

“Councils are well-equipped to make decisions regarding how they respond to and recover from the economic effects of the coronavirus pandemic and if councils determine this should include conversations on amalgamation, then the Government will work with them on their ideas.”