I'm ideologically predisposed to favour local government over state government so I'm immediately suspicious with any attempt to overrule a local council.
I really need to sit down and go through this Coolgardie situation. My understanding of the bare bones is that the mining industry was screaming out for for more accommodation for miners. Coolgardie council responded by releasing some land for mining companies to build on and built their own "village". The building project was mismanaged and over budget and hasn't returned the revenue expected. Council tried to cover the shortfall by heavily increasing rates on miners which was overruled by the state govt. They have now been accused of doing nothing to get themselves out of this mess.
At a glance it looks to me like an underresourced council doing its best and overeaching and when it fell apart made a hard decision to tax higher to regain financial stability. It looks a lot like Perth wants to amalgamate Coolgardie into Kalgoorlie-Boulder and this is pretext.
But as I say, I need to be guarded with my judgement because of my ideological predisposition.