"Mike Baird is a coward for refusing to show up to the inquiry today," said Sam Dastyari, a federal Labor MP. He also accused the government of gagging its economic bureaucrats. "NSW Treasury was coming today; they have been told by the government that they couldn't attend".

The former NSW party boss was appearing with fellow senators Lee Rhiannon of the Greens and Tasmanian independent Jacqui Lambie at a Senate inquiry into asset sales held at the state library Wednesday.

A spokesman for the NSW Treasurer, Andrew Constance, said Treasury was unaware of any invitation to attend the inquiry, which he dismissed as a "collection of Canberra's weird and wacky identities".

"Any outcome from this inquiry would no doubt reflect their weird and wacky views," the spokesman said.

The issue of privatisation is set to feature prominently in next month's state election. It involves the federal government because it has promised to make cash payments to states that sell assets, such as Mr Baird has promised to do with half of NSW's "poles and wires" or electricity distribution networks.

But that money has stalled in the federal parliament, where legislation is locked in a stalemate, leading to calls for Mr Baird to revise downwards estimates of how much money the sale would reap.

Wednesday's inquiry featured testimony from several critics of privatisation including economist John Quiggin and the Australia Institute think tank.

Federal treasury bureaucrat Chris Legge said the federal government had determined to pay the states up to 15 per cent of the money spent on infrastructure funded through privatisations; a figure arrived at by negotiation.

Members of the Labor-dominated committee questioned why those incentives needed to be tied to privatisations. Mr Legge said it reflected federal government thinking that the states would have little money to spend on projects otherwise.

The federal government has promised about $6 billion in such incentives if they sell off assets.

But the Senate has blocked about $3.5 billion of that, which the Abbott government had planned to take from education funding. The bill to release funding has now stalled in the federal senate.

That could have serious implications for NSW: if the federal scheme does not go ahead, it could take more than $2 billion out of the $20 billion windfall the state government promises will be netted from its sell off, according to Infrastructure Partnerships Australia.

"Premier Mike Baird is promising to deliver a $2 billion federal sweetener for his poles and wires sell-off from a federal fund that that doesn't exist," said NSW Greens MLC John Kaye. "The Premier should be honest about his privatisation balance sheet and cut his infrastructure inducements by at least $2 billion".

Dr Kaye accused the state government of further inflating its expected revenue from privatisation by claiming it will earn $5 billion in interest on the sale alone.

A spokesman for the Premier said he was confident the federal government would deliver the scheme in full. "We are outlining a $20 billion infrastructure plan and we'll be delivering it."

A Commonwealth bank analyst, William Allott, told Fairfax on Wednesday the assets may even be valued at more than the forecast $20 billion. He projected the market could pay up to $25 billion for the lease.

Tasmanian Senator Jacqui Lambie dismissed the payments as a "bribe".

"Once you decide to sell it's all over red rover," Ms Lambie said of infrastructure sales.

The Tasmanian senator warned that a re-elected Baird government that sold off electricity assets would be, like its federal Liberal counterpart, "living on borrowed time".

The NSW Labor party is gearing up for a negative campaign on the issue of privatisation, after a similar proposal turned voters in Queensland off a sitting conservative government.

The senator from NSW dismissed a report by consultants Ernst and Young, comissioned by the Baird government, that found privatisation had led to a drop in retail electricity prices in Victoria.

"They were then awarded [another government] contract," Mr Dastyari said. "That's the kind of thing you see in the Mugabe regime".

Treasurer Andrew Constance also cites research from other sources such as the Grattan Institute and Frontier Economics in support of the claim.

ACCC Chairman Rod Sims said he believed privatisation would lead to lower prices in an August speech but in its submission to Wednesday's inquiry the watchdog warned against structuring any deal to maximise sale proceeds to the detriment of competition in the market.