Opposition Arts spokesman Walt Secord made the comment following this week's parliamentary inquiry into the government's management of the museum and its relocation to Parramatta.

The government has since decided to keep the Ultimo site as well as build a new museum at Parramatta.

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But the decision has raised questions on whether some items in the Ultimo collection would still be dispersed to regional museums and galleries.

Talks between the Powerhouse and Goulburn Mulwaree Council have been underway for some time about relocating the 1837 Maudslay Sons and Field steam engine back to Goulburn. It powered an industrial complex at the Old Goulburn Brewery before being transferred to the Museum of Applied Arts and Sciences in the 1920s.

Old Brewery owner, Michael O'Halloran wants it back "where it belongs", while the council is negotiating with the Powerhouse for its relocation to the Goulburn Waterworks.

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Goulburn works to reclaim Old Brewery's Maudslay steam engine

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Mr Secord asked the museum's chief executive, Lisa Havilah, on Wednesday whether the council's representations about the engine were "dead in the water."

Ms Havilah replied that the Powerhouse had a "long history of collaborating with regional museums and regularly loaned items.

"We have a request from Goulburn City (sic) Council and our collections team is currently considering that. There is no outcome at this stage," she told the Select Committee inquiry.

"...We need to check things like environmental conditions and context and a whole range of different perspectives in terms of considering a loan. We are following that process..."

The council is trying to meet the terms of a Memorandum of Understanding regarding the relocation. General manager Warwick Bennett previously told The Post that he was awaiting more detail from the Powerhouse but also investigating if The Waterworks could be adapted to house the engine.

Internal email correspondence obtained by Labor revealed that the Powerhouse had declined the council's request for the engine in April, 2019. However it appears that negotiations have resumed.

The inquiry also heard that the Powerhouse would no longer be transferring Locomotive No 1 to Thirlmere's NSW Rail Museum, despite earlier moves to do so.

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Mr Secord said the government's decision to have two Powerhouse facilities had "unintended consequences."

"All the promises they made to rural and regional museums are now in jeopardy," he told The Post.

"I think the government should do the right thing by Goulburn. They seem to have engaged in discussions with regional areas and then done a back-flip. I hope they keep their promise but I think it's highly unlikely Goulburn will get the engine."

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Mr Secord claimed the government had not done its due diligence on the Parramatta museum, was wracking up "huge expenditure" and had not consulted key people before reversing the decision to sell the Ultimo facility.

He believed with only 10pc of the Powerhouse's collection displayed, and the rest stored, regional areas should receive some items.

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