Lindsay Sharp, who led the Powerhouse from 1978 to 1988, also said a developer could earn windfall profits of $400million-$700 million from the sale of Powerhouse (rebadged as the Museum of Arts and Applied Sciences) at Ultimo.

Sharp said the government "seems to have misled the public" on the cost of the move in a submission to the NSW Upper House Inquiry into museums and galleries.

"The project does not appear to be good value, appears poorly managed and is open to many fundamental questions regarding assumptions, business case, costing, project governance and transparency," he said.

Public hearings began on Monday, with businessman and former Powerhouse trustee Trevor Kennedy removed from the inquiry following evidence from new board chairman Professor Barney Glover, the vice-chancellor of Western Sydney University, and the museum's director Dolla Merrillees.

"I couldn't contain myself and sit there listening to a whole lot of people talk crap without providing analysis and transparency about what is a very serious issue," Kennedy said.

Kennedy also attacked the board in a written submission to the inquiry chaired by Robert Borsak from the Shooters and Fishers Party.

"One of the most disappointing aspects of this whole affair is the apparent slavish complicity of the current trustees to this proposition," he said. "What are trustees for? In my day we were there to safeguard the collections, the building, the history – and then go out and raise money and interest in, and for, the institution."

The inquiry, which received 169 submissions, is also looking at government funding for NSW museums and galleries and the impact of the efficiency dividend on institutions' budgets.

The NSW government said in its written submission that the new museum will be the anchor for an arts and cultural precinct in Parramatta and support economic growth in western Sydney. The MAAS board's submission only briefly mentions the Parramatta move as a "unique opportunity".

Former Powerhouse trustees, meanwhile, have condemned the museum's board in written submissions to the inquiry.

Nick Pappas, who led the board from 2003 to 2010, said board members had not fulfilled their legislative duties to protect the museum's interests.

"Contrary to the expectations of many, the Museum's Trust hardly turned its mind to the pros and cons of relocation," he said.

Pappas, who was made a life fellow of the Powerhouse in 2011, also drew attention to its historic connection to the inner city.

"Museums are not departmental offices that can be abruptly shifted holus bolus to new localities for reasons of efficiency or savings, or even for reasons more mischevious," Pappas said. "Rather, they are our secular shrines where we silently reflect on human endeavour. And, over time, their attachment to their place becomes as significant as the collections they house."

Another former board chairman, Marco Belgiorno-Zegna, questioned why other major cultural institutions such as the Australian Museum and the Art Gallery of NSW were not also earmarked for western Sydney.

"The indisputable fact is that in recent times the Powerhouse has been poorly managed and has not been well supported by the government," he said.

Kylie Winkworth, a trustee from 1996 to 2003, said the NSW government had planned the Powerhouse's move to Parramatta and without consultation: "This secrecy, lack of transparency and poor museum planning puts hundreds of millions of dollars of taxpayers' funds at risk."

Winkworth also said the performance of the Powerhouse Museum had been hard hit by budget cuts, the efficiency dividends, restructures and redundancies: "Staff numbers at the PHM have nearly halved over the last decade, and have dropped by more than half over 15 years."