UPPER Hunter Shire residents say the council is "one step away" from bankruptcy and "structurally tenuous" as they wait on the state government's response to a calling for an investigation.
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The management of Murrurundi Dam has emerged as a key issue among the 1200 people who signed the petition recently tabled in parliament.
It calls for an investigation into the council and for an administrator to replace it.
"There are a lot of concerns about the council and where it's going, or not going," says Peter McGill of Murrurundi.
"The whole structure of the council is tenuous on a good day, the communication is so bad, and the to-do list in Murrurundi keeps getting longer, it never gets done.
"Now they've decided they want to de-commission Murrurundi Dam, which would be a waste of a community asset. Where's the logic? They were waving around numbers that they could save $400,000 but that is highly disputed, they haven't quantified what the savings could or would be. It would cost $1 million to de-commission it.
"Their rate base is so small they just have to rely on grants and by the time they get the money the cost of doing the work has just gone through the roof."
Another resident, Ray Hynes, who is behind a social media campaign to try to keep Murrurundi Dam as a recreational asset and nature reserve, said people felt they were getting nowhere with the council on that and many other issues.
"We sort of feel as a community that ... we will spend all our energy on this and we just won't achieve what we want."
It is understood the Minister for Local Government Ron Hoenig is required to respond to the petition before December 26.
In the meantime, the Office of Local Government has confirmed it is still investigating the council's botched attempt at repairing the Merriwa to Willow Tree Road which has been closed since early 2020.
The state and federal governments have committed $48 million to reconstruct the road but the community is still waiting for construction to get started.
The council has also come under attack for taking too long to process development applications. However, the council has defended its record saying the median time taken to deal with development applications in the 2022/23 financial year was 24 days, "significantly less" than the 40-day target it has set itself.
The average wait was 40 days, with some applications of greater complexity often requiring more consultation, a spokesperson said.
With regard to Murrurundi Dam, it was no longer required for water supply due to a new pipeline from Glenbawn dam, which was a safer and more secure source of water, a statement from the council said.
"Community meetings and consultation has been undertaken and comments on the future of the dam will be considered until March 8."