Confusion reigned in the council chamber on Wednesday night as to the consequences of the decision, with $10 million and other incentives on the table, understood to be available only to councils who volunteer to merger.

Given Palerang Council - with whom Queanbeyan would most likely merge - had already disagreed, it was not clear whether the incentives would be handed out if Queanbeyan volunteered to amalgamate.

Across the state, councils were asked to merge with neighbouring local government areas as part of the Fit for the Future initiative, to condense the 152 councils and create a more sustainable sector.

An independent IPART assessment found two-thirds of councils in NSW, including Queanbeyan, Palerang, Yass, Goulburn and Cooma-Monaro, were unfit to continue in their current state. 

Councils were given until November 18 to respond - in just 50 words - to the assessment, basically stating if they would agree to amalgamate or not.

At Wednesday’s meeting, a  majority of councillors agreed to tell the state government “to get stuffed”.

Cr Kenrick Winchester said "we've got the gun held to our head and we're blinking".

"We should tell them to get stuffed."

“We need to stand up for the community,” Cr Winchester said.

“The submission should say council rejects any merger proposal, it won't say much more than that because it's only 50 words.”

Cr Sue Whelan said the outcome of the flat refusal would be unclear.

“Nobody knows what's going to happen. There has been conjecture, assumption and moving the goalposts [by the state government],” she said.

“We should do what we think is best for the community and get on with it. We don't know what the state government is going to do.”

While a majority of councillors agreed the 50-word response to the IPART report should be firm, three councillors including the mayor said they could not support a motion that had no leeway.

“I think this is head-in-the-sand,” Cr Overall said, who had put forward a motion stating the first preference would be for Queanbeyan to envelope part but not all of Palerang.

“I can’t support a motion that doesn’t at least give some latitude… It’s detrimental to Queanbeyan and to the wider region in view of what is likely to occur, a merger,” he said.

Despite the opposition, the motion was carried.

QCC general manager Peter Tegart was tasked with preparing the 50-word response against the merger in line with the motion.