Sydney faces some of the poorest travel to work times in the world, and the city's gaping inequality means you can determine someone's social outcomes by their postcode, an upper house inquiry has heard.

"So management of place in bigger cities has never been more important," said Associate Professor Roberta Ryan, the director of the Centre for Local Government at UTS. "We're facing some of the most deep-seated spatial inequity in the world."

However, rushing through changes to Sydney's councils was not the way to do it, she told the opening day of a parliamentary inquiry into local government.

Professor  Ryan said the state government's overhaul of councils should be connected to its formation of a new strategic planning agency, the Greater Sydney Commission.

"At the moment we're kind of having these two separate debates," she said. "We need to be looking at metropolitan governance and local government reform simultaneously."

Professor  Ryan added this kind of strategic overview was not the "skill set" of the agency the government had tasked with running its "Fit for the Future" process, the Independent Pricing and Regulatory Tribunal.

IPART is due to deliver its assessment on whether each of the state's 152 councils is "fit" or "unfit" as either merged or stand alone councils by October.

The state government has repeatedly refused to rule out forcing mergers of reluctant councils – a move deeply unpopular with many councillors and mayors.

Professor Ryan also questioned their effectiveness, telling the inquiry "the evidence shows that its entirely advantageous not to force amalgamations".

"I think that reform that occurs in a voluntary way, where councils come together based on their expertise and their local circumstances, you end up with better outcomes," she said.

The chairman of the Independent Local Government Review Panel, Graham Sansom criticised the government's seeming inaction on reforms the panel said would need to happen before or alongside any mergers, which were only proposed for 61 councils.

"I think it's unfortunate that we've now had a process since then which has got 144 councils excited, when we probably could have dealt with the 61 first up in a perhaps more measured and thorough way," he said.

Fit for the Future's heavy focus on financial indicators in its criteria for councils "steered the debate in a somewhat unproductive direction," he added.

But Professor Sansom also took a swipe at smaller councils such as  Woollahra and Mosman, arguing that the City of Sydney demonstrated what could be achieved by a large council.

"It's all very well to be very pure and to have nice small local councils where everybody knows everybody else and so on, but the question is, is that the best way of making sure that community interests are reflected in the big picture decisions about the future of Sydney?"

"And I would say no, it's not the best way."