The man in charge of Transport for NSW has been dumped despite Premier Gladys Berejiklian praising his performance as department secretary.
Documents obtained by Labor in the NSW Legislative Council show the dismissal of Rodd Staples was "for no stated reason" and will cost taxpayers more than $800,000 in payout entitlements.
Transport Minister Andrew Constance has not explained why the government decided in November to remove Mr Staples, saying at the time "now is the time for a new focus on delivering our record infrastructure program".
Labor's finance and small business spokesman Daniel Mookhey said Mr Staples was told of his dismissal following a performance review by the premier in August which found his performance was 'above satisfactory'.
Mr Staples finishes as department secretary on February 19 and the state government is yet to announce his replacement.
Mr Mookhey said the premier and Mr Constance had questions to answer about the treatment of the "respected public servant".
"Mr Staples' termination reeks of an internal power-play at taxpayer's expense," he said in a statement on Tuesday.
"To fire a respected public servant like Rodd Staples for no reason is an arrogant act. It risks the delivery of every transport project meant to create jobs."