The Powerhouse Museum doubled spending on advertising and publicity while cutting staff numbers following a drop in government funding, according to its latest annual report.

The museum's outgoing director Rose Hiscock, who resigned earlier this month, was upbeat about the future of the embattled institution following last year's poor results – pointing to a 12 per cent increase in visitors and 51 per cent rise in sponsorship.

"The results in the 2014-15 annual report show the museum is well equipped to continue to deliver on statutory objectives," said its spokeswoman Rebekah Waite.

However, income from admissions in 2014-15 was down 2 per cent from the previous year, according to the annual report.

Arts Minister Troy Grant has pointed to the Powerhouse's falling attendances as justification for the NSW government's decision to move the museum from inner city Ultimo to western Sydney.

"Western Sydney has a rapidly growing population and figures show that in its current location, the Powerhouse's visitor numbers have dropped by more than 180,000 between 2008-09 and 2013-14, with school group numbers in 2013-14 almost half of what they were in 2000," he said.

The institution, rebadged as the Museum of Applied Arts and Sciences, also cut its workforce from 242 to 188, with curatorial staff reduced from 96 to 73.

Conversely, the museum managed to enhance its customer service, commercial, communications, curatorial and digital capabilities, while liberating $5 million to spend on exhibitions, according to the annual report.

The museum also more than tripled its spending on touring exhibitions to $5.46 million in 2014-15, with shows imported from London's Victoria and Albert Museum and the Centre National du Costume de Scene in Paris.

"As the museum continues to lift its international profile and work with a range of world-renowned institutions, the number of new exhibitions has increased," Waite said.

The V&A exhibition Disobedient Objects was censored by MAAS, with two objects removed following legal advice.

Waite said the museum doubled its budget for advertising and publicity to $1.4 million because it "recognised that it requires a stronger profile in the marketplace to attract new and repeat audiences".

The museum is also planning its relocation to one of two potential sites in Parramatta while spending money on improving its site in Ultimo.

The annual report highlights the opening of a new museum entrance and the completion of "The Goods Line interface" at "minimal cost", according to Waite.

"The time frame of the museum's move to Parramatta is yet to be determined," Waite said. "It is important for the Powerhouse to remain a viable and vibrant site while it remains in Ultimo for the coming years."

The NSW Parliament will debate the controversial relocation of the Powerhouse to western Sydney after a petition opposing the move gathered more than 10,000 signatures.

The Powerhouse also reported a deficit of $62.8 million, which it blamed on a revaluation of its collection that declared its Boulton and Watt steam engine to be priceless and removed from valuation.