If the Keating government had listened to the Finance Department more than 20 years ago, Canberra would have no National Museum today.
The Labor government ignored a recommendation made in cabinet papers from 1994-95 to abolish the national institution, now a popular tourism drawcard for the capital and the home of recent blockbuster exhibitions.
While the museum welcomed more than 630,000 people to its permanent galleries last year, cabinet documents released on Monday by the National Archives of Australia show that questions about its purpose prompted internal calls for either its closure or a radical overhaul during the Keating years.
Cabinet papers also reveal the Labor government agreed to an expansion of Old Parliament House's role, a long-term home for the National Film and Sound Archive and a $3 million extension to the National Gallery of Australia.
The cabinet decided to pour funding into Canberra's museums and gallery scene ahead of Prime Minister Paul Keating's speech in October 1994 giving a redefined government role in funding cultural programs.
The Finance Department in cabinet papers warned against a proposal to create a "museum of the future" that would involve downsizing the National Museum of Australia and making it a "networking institution".
"The proposed refocusing of the National Museum as a networking institution is poor value for money and will only serve to allow the debate on the size and nature of the museum to continue into future years," it said.
The department made a bold call for ministers to "take a decision now" to close the National Museum and redirect savings into other cultural programs.
Arts Minister Michael Lee in a submission said the museum had strong public support, but proposed a rethink that would leave it without a major physical presence in Canberra and move it away from collecting.
It would use multimedia and broadband to bring national collections to people in electronic exhibitions and databases.
Mr Lee also recommended the government fund a national gallery of Aboriginal Australia in Adelaide, a plan that would have transferred the Indigenous collection of the National Museum to South Australia.
The Aboriginal and Torres Strait Islander Commission rejected the plan and called for greater consultation.
"The current proposal of separating the gallery will not provide the level of national recognition sought by Aboriginal and Torres Strait Islander peoples nor is it consistent with past undertakings given in respect of individual collections handed over to the National Museum as part of the process of establishing a national collection," it said.
Mr Keating's cabinet agreed instead to create a Gallery of Aboriginal Australia, housing the National Museum's Indigenous collections, on Acton peninsula with new accommodation for the Australian Institute of Aboriginal and Torres Strait Islander Studies.
It decided to leave the remaining collections at the National Museum, which continued despite the Finance Department's recommended closure.
The Keating government also agreed to fund refurbishments and audio-visual displays on Australia's political history at Old Parliament House.
Cabinet ministers were told the the National Gallery extension would stop temporary exhibitions disrupting its permanent ones, and free spacefor a proposed gift of more than $5 million in Chinese art that would build "an important cultural link between Australia and the People's Republic of China."
The Department of Prime Minister and Cabinet questioned the renovation, saying the gallery could set aside dedicated space within its existing building or using Old Parliament House.