Am not certain what you mean by "impact on the donor cities", Swilkie. Do you mean metropolitan ones who are presumed to subsidise the bush? Or do you mean the cities that will become the new seats of government?

It only appears to be "cost inefficient" if one only considers the most visible parts of the cost structure. State governments spend a huge amount of money on sending metropolitan based bureaucrats into the countryside to get a handle on regional issues. The problem is that the rate of staff turnover and transfer is so high that the same expense is needed again in six months.

Over the entire business of state government this amounts to a massive waste of funds that would not be incurred by a regional state administration. Sure, there would be some duplication of Head Office functions but this is dwarfed by the diseconomies of scale that are found in larger states. No-one seems to notice the total waste (inefficiency) of bringing a country MP to Sydney to listen to interminable discussion about traffic snarls. They should be in a smaller parliament in their region focussing on local issues with people who are already up to speed.

Get me some funding for proper economic modelling of this stuff and we can put this issue to bed anytime. Big government is a disaster for both city and country.

Far an additional insight into the diseconomies of centralised, metropolitan dominated states see the article "Congestion Charging Schemes for Australian Cities" by Dick Wharton, above and the commentary. This provides a basis for calculating the value of metropolitan cost savings that more than offset any duplication costs from forming new states in the regions.