Deloitte Economics was commissioned by council to assess the economic impact of a new cultural precinct with the Powerhouse Museum as the NSW government negotiated to acquire the riverbank site known locally as the David Jones car park.

The same analysis found the economic impact of a $500 million museum build could be as little as $106 million if international and domestic visitors did not come in the big numbers predicted, an upper house inquiry into the Powerhouse move heard..

"If that's what you are looking in terms of economic impact," Greens MP David Shoebridge said at Tuesday's hearings, "it's a pretty poor investment for the region."

The number was conservative, said the council's administrator, Amanda Chadwick: "That's the stimulus on top of construction."

Estimates by the museum's founding director Lindsay Sharp, reported in Fairfax Media on Monday, that the move could cost up to $1.5 billion once capital expenditure, flood mitigation, moving expenses and inflation was factored into the decision dominated proceedings.

The NSW Arts Minister Don Harwin said the "cost to taxpayers" would be far less than $1.5 billion.

Asked if design compromises would have to be made to satisfy the needs of a commercial third party brought in to offset the project's ballooning costs, Mr Harwin said it was the nature of such reports to look for risks.

"I have no idea why the consultant put that in the report but I'm very confident that it will be an iconic world class building," Mr Harwin said.

Ms Chadwick said design excellent standards set by council and state planners would mitigate against any such risk.

Under questioning from committee chair, Robert Borsak, of the Shooters and Fishers Party, Mr Harwin denied the government had entered into any formal or informal agreement with developers around future use of the Ultimo site.

He was unaware the government had any contact or had begun negotiations with developers but took the question on notice along with questions around the value of airspace above the Powerhouse Museum.

Throughout the minister's evidence the government continued to send mixed messages.

Announcing the purchase of the riverbank site on July 28, NSW premier Gladys Berejiklian said: "Let me be clear, there will be one Powerhouse Museum in NSW. It will be across the river here [in Parramatta]."

But Mr Harwin maintained relocation would proceed subject to the finalisation of the government's final business case expect at the end of 2017.

The business case would consider "all options" to deliver a museum at Parramatta including a "flagship campus" and "continuing a cultural space in whole or part in the precinct at Ultimo", he said.

Labor's Walter Secord calculated a $1.5 billion cost could pay to build two Sydney and five country hospitals.

Ms Chadwick outlined purchase details for the new Powerhouse site.

In exchange for the riverbank site, the NSW government had agreed to pay council $100 million for the redevelopment of the Riverside Theatre, $10 million for a pedestrian bridge, and $40 million for council to deliver cultural polices.

Ms Chadwick conceded a business case had yet to be prepared for the theatre's expansion. Were it deemed imprudent the promised $100 million would be returned to council to be invested in other community priorities, she said.

The upper house committee will call Ms Berejiklian, the former premier, Mike Baird, and the former arts minister Troy Grant as future witnesses.