The claim was made in a Fairfax news article yesterday, and related to five lower house MPs from rural and regional areas.

It said they had been affronted by the Government's attempt to link the sell-off to rural spending.

The MPs reportedly believed Mr Iemma committed a major breach of faith when the state budget failed to contain a response to funding recommendations issued by the Rural and Regional Taskforce, headed by Wollongong administrator Col Gellatly.

A budget release which referred to the taskforce had said:

"The Government will be making announcements about enhanced infrastructure investment in rural and regional NSW in the context of utilising proceeds from its electricity reforms".

Independent Northern Tablelands MP Richard Torbay told Fairfax he was disappointed the budget did not address the taskforce's recommendations on infrastructure, telecommunications, broadband, the authority of local government and transport.

"The taskforce was designed to deliver good policy to the people of rural and regional NSW and the fact that was not considered in the budget is a major disappointment," Mr Torbay said.

"Most people in rural and regional NSW do not support the privatisation. They do not like it," he added.

Yesterday, Minister for the Illawarra David Campbell said the "first time I'd heard about that was when I read the article" and "I have never had any discussion in those terms".

Mr Campbell said all areas would benefit from any extra money created by electricity privatisation.

Kiama State Labor MP Matt Brown said he had never been approached about supporting electricity privatisation for the sake of funding.

"Significant money has always been invested across NSW, Illawarra and in my electorate of Kiama."