That is a sure fire way to create a three tiered system in senior rugby:
1) Premier Rugby
2) Big Subbies Clubs
3) Everyone else stumbling around a wasteland of what's left, waiting for the axe to fall either through lack of players but more likely through lack of volunteers.
Are we already not there, though, and is that a bad thing?
Premier/Shute/SRU serves an important purpose - it is the top level of club rugby and was traditionally, and will be again next season apparently, the top level of club rugby you could watch on FTA. Essentially, they fly the flag for the game below Super and Test level.
The big Subbies clubs are the next level - traditionally, many of these clubs would be lower division SRU clubs aiming to break into Shute competition but now serve as the "elite" amateur clubs below the semi-pro Premier clubs. For those who want strong competition without competing for pro contracts - just good, tough rugby.
Then we have the lower Div clubs - one for the weekend warriors who just want a game locally. Rugby for the sake of rugby without the cut-throat nature of the top divisions.
Now, where are the problems with this system? At the moment, the glass ceiling between SRU and Subbies means there are clubs who have bigger aspirations that are trapped in a system where they cannot operate as an elite club. Think your Drummoynes who want to operate at a level above amateur community rugby. Then you have the other, traditionally "Subbies" clubs who want top level competition but are more than comfortable operating as a community club.
This pushes down the line as well, with blurred lines between Div One and Div Two clubs like Petersham, Forest and Newport who teeter between the two and haven't been able to establish themselves like the Colleagues and Mosmans of the union. As you go further down, the gulfs continue to grow and you end up with logjams along divisional lines.
Subbies and the SRU have fundamentally not significantly changed in scope in the last 4 decades as far as I can tell - amateur policies and player points policies, of course, but Shute operates in a form of purgatory where it's a Sydney comp, then a NSW comp, and back again. Subbies gets the rejects from the SRU, like Penrith, Drummoyne, Hornsby, UNSW, etc.
We need better alignment between all levels of rugby - things like the Tooheys New Cup and the ARC/NRC were supposed to help with this but had their deficiencies and have gone by the wayside. If the SRU can't get it done then what chance do we have?
IMO there needs to be a strong and thorough look of what Subbies competition will be into the future - if the aim is to become a social union, then you risk alienating the top clubs, but if you aim to be a fully competitive system, you will lose the lower end of town. The solution, in my view, is there needs to be either a middle ground or a split system to accommodate that.
A two-tier Subbies system, with a "Premiership" tier and a "Championship" tier, split into sub-divisions based on performance, is where I'd be looking. The logical split is along the lines of clubs with and without Colts but this doesn't fundamentally solve the current issues we have. Things like scheduling and divisional structures could be more rigid in the "Premiership" where competition is king but more relaxed in the "Championship" where just getting games on the park is focus. Teams can nominate which tier they would like to be considered for and, along with performance, facilities, numbers, etc. could be graded into one of those tiers.
What does this achieve? It means that clubs within tiers and divisions are closer in culture and aspiration to each other. You can tailor the more relaxed competitions to have less stringent schedules, less teams in a competition to ease travel while building inter-club connections. At the top end, you have the same alignment of "we want to compete with you" where you can really test which clubs are the best, without some of the mismatches we see where a highly ambitious club ends up getting mauled by the incumbent strong clubs.