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Representatives of Sydney's museum community say selling and relocating the Powerhouse Museum from the CBD to the west will kill the cultural precinct.
The New South Wales Government has been looking into moving the iconic arts and science museum from its current location in Ultimo to the banks of the Parramatta River.
But the Government changed its tune on its original proposal, which was announced in 2015, and this week said it was considering keeping "some Powerhouse presence at the current site in Ultimo".
But there was concern from the Powerhouse Museum Alliance that relocating or sharing the museum's collection would see the exhibition lose its allure.
"Museums aren't trophies or shopping trollies that can be picked up and moved somewhere else," said Grace Cochrane from the alliance.
"Everybody in the museum world realise it's a stupid idea just to pick it up and dump it just for the sake of property development.
"We utterly and completely oppose it and think it is absolute madness."
Ms Cochrane said the collection "won't work" in the same way if it is permanently divided at large distances.
You wouldn't close the Louvre: Plibersek
Labor described the proposal as a thoughtless money grab.
"It's mad to think that a city like Paris would close the Louvre to open the Pompidou Centre," said federal member for Sydney, Tanya Plibersek.
"Sydney residents are really troubled thinking this building could be sold off to the highest bidder and are not for putting a skyscraper on every square foot of available land."
While western Sydney businesses have thrown their support behind the proposal, there are calls for Parramatta to establish its own cultural institution.
"Parramatta has some of the oldest colonial buildings, its unique immigration past and aboriginal history in New South Wales – its diverse community deserves its own," said Patricia Johnson from Save the Powerhouse, formed by disgruntled local residents.
The group said the Powerhouse was a vital asset in making the city liveable and attracting tourists.
"It's been extremely frustrating over the past two years but the change to the Berejikilian Government, being more consultative, has made us cautiously optimistic," Ms Johnson said.
A business case is due to be released later in 2017 which the Government will consider in its decision making.
Public consultation on the proposal was also announced this week and is due to open later this year.
Topics: library-museum-and-gallery, ultimo-2007, parramatta-2150