How big should a library be
Smaller than it is, in almost every organisation.
There is no correct number, and the useful question is whether the set is navigable by the people expected to use it. If a staff member with a genuine question cannot find the answering document in a couple of minutes, the library has failed regardless of its completeness.
Consolidation usually helps more than reorganisation. Several documents governing adjacent parts of one process can generally become one, and the merge frequently surfaces contradictions that existed unnoticed while they were separate.
The other reduction available is to distinguish between what must be a policy and what is guidance, a template, or a standing instruction. Much of a typical library is not policy at all and is held to policy formality, which imposes approval and review overhead on material that could simply be updated when it changes.
The measure worth tracking is not the count but how often documents are opened. Most systems can report it, almost nobody looks, and the report generally shows that a small fraction of the library accounts for nearly all use. That fraction is the library that matters and it deserves the maintenance effort the rest is currently absorbing.
The consolidation argument has one limit worth respecting. Merging documents that different regulators or different obligations attach to can make it harder to demonstrate that a specific requirement is addressed, and some separation exists for that reason. The test is whether a division serves a reader or only a filing system, and most divisions in a large library serve neither.