Ms Merrillees had decided not to apply and will not return to the museum after an extended period of leave ends in September. Ms Merrillees' resignation comes in the wake of revelations that the black-tie dinner hosted by the museum in February was a massive loss maker, costing $388,000 to stage, and requiring the museum to chip in $215,209.50 from its own budget. The fundraiser raised $78,000, of which a mere $1050 was raised from supporters on the night. Questions remain unanswered around the conduct of senior museum executives on the night of the ball with the release of security logs doing little to settle allegations made in NSW Parliament by the NSW Shooters, Fishers and Farmers party MP, Robert Borsak, of drunken revelry and excess. Loading Security logs reveal that staff members were dancing and listening to music at 3.30am in executive offices well after final drinks were served and the museum doors closed.

One staffer was so drunk they ''had to be looked after by another member of staff and then taken home by taxi'', according to an event report also obtained under Freedom of Information laws. The museum has denied allegations made in NSW Parliament by Mr Borsak that several prominent museum staff were discovered ''intoxicated, drinking Moet & Chandon in the presence of a white powder''. But it is the government's need to push on with the $1.1 billion capital works project and manage construction and redevelopment on three sites in Ultimo, Parramatta and Castle Hill, that is likely to have played a major factor in Thursday's announcement. President of the MAAS Trust, Prof Barney Glover, paid tribute to Ms Merrillees for her outstanding leadership and her curatorial skills. ''Making this decision now allows us the time to find the best candidate who can manage this major new cultural infrastructure project through to implementation,'' he said. Ms Merrillees has championed fashion and design at the museum, and was successful in securing the donation of Akira Isogawa's design collection. She was director of curatorial, collections and exhibitions at the Museum of Applied Arts and Sciences before her appointment as overall museum director.

The upper house inquiry into the museum's relocation to Parramatta is expected to investigate the use of taxpayer money for the fashion ball at future hearings. Ms Merrillees's departure comes as the museum has been haemorrhaging specialist expertise. The museum is without a manager of conservation, head of development and a senior audio-visual technician. The director of external affairs left soon after the fashion ball. The museum’s maintenance department is believed to be making all trades roles redundant - three electricians and three machine fitters - and these are expected to be replaced by external contracts. Those staff will leave in September. The head of Sydney Observatory resigned in September 2017, and the head of the Museum's Discovery Centre resigned last December. Inquiry's chairman, Mr Borsak said the new CEO position was about the government appointing a ''developer's dog'' to strong arm the development process and destroy the Powerhouse Museum once and for all.