Abdula Ganiji, 58, appeared via video link before Central Local Court yesterday charged over the incident on December 20.

The Wollongong man caused a lockdown of Macquarie Street in Sydney's inner city when he drove his car on to the footpath outside Parliament and allegedly made a number of threats.

A two-litre fruit juice container, fuel and a cigarette lighter were allegedly found after a dozen tactical officers swarmed his car, fired a canister of gas inside and dragged him into custody.

He was charged with threatening sabotage, possessing an explosive device to damage property, and threatening to destroy or damage property.

Police prosecutor Sergeant Ross Mitchell said the charges against Ganiji were of the "utmost seriousness".

"It's an amateurish thing he's done, but there's been some forethought and some planning," he said.

The prosecution also put forward a fresh allegation that Ganiji had more than one container and a total of 40 litres of fuel when he was arrested.

Ganiji's barrister, Jane Healey, said her client had been assessed by a psychiatrist and posed no risk to the community.

She said only a small amount of fuel was discovered after the incident and he "did not have the capacity to destroy Parliament House".

"This accused has no prior criminal record despite his history of lawful protests," she said.

"The threat posed by this individual were he to be released on bail is almost negligible."

In a report tendered to court, Ganiji's psychiatrist said his patient had thoughts of dying by burning himself or by hunger strike, and although he posed a risk to himself, he was not a danger to others.

But magistrate Les Mabbutt said he could not be sure of that view and he refused bail, citing the seriousness of the charges and the need to protect the community.

After the decision was handed down, Ms Healey, on behalf of her client, put in a plea of not guilty to the charge of threatening sabotage.

The matter will return to court on January 20. AAP