The NSW government has defended the choice of the Museum of Sydney as an Indigenous cultural space, saying First Nations people now have influence over a key colonial site.
Former premier Mike Baird in 2014 promised to work towards a national Indigenous cultural centre at the Cutaway at Barangaroo and design plans were drawn up.
But the NSW government has announced different plans for the space in recent months, and a cultural centre to be based at the museum, the site of the first Government House.
Indigenous leaders who had been part of a task force to develop the Barangaroo centre have publicly expressed their disappointment and heartbreak.
But Aboriginal Affairs Minister Ben Franklin told a budget estimates hearing the museum was a symbolically appropriate place for an Indigenous cultural centre.
"It shines a very bright light on the fact that this country was colonised by people from Britain at the expense of First Nations people," Mr Franklin told the hearing at state parliament on Monday.
"This is something that will continue to progress in conjunction, consultation and collaboration with Aboriginal people.
"I will continue to work with them to identify the best places we can focus on and support Aboriginal cultural heritage in this state."
Mr Franklin said the centre at Barangaroo was never a formal commitment and never received budget funding.
