Labor says the New South Wales Premier has betrayed country people in her comments on the axing of 500 regional jobs over several years by state-owned entity Essential Energy.
The proposed job cuts come just months after the government promised it would protect rural and regional public sector jobs as the state battles drought.
Leader of the NSW Labor party Jodi McKay was reacting after Gladys Berejiklian was reported by Newscorp as saying her hands were tied on the issue.
The NSW Premier's comments have exposed an internal division between the Nationals and Liberals.
Speaking from Europe, Gladys Berejiklian said "New South Wales is going through a very difficult time (due to drought) and I can appreciate the frustrations when a company comes along and says they want to take jobs away."
"But also there is a process there as well. We'd love to be able to say to someone you can't do this but that is not how it works and that is why the Treasurer is meeting with the CEO (of Essential Energy) on Monday."
Ms Berejiklian was speaking after the NSW National Party leader John Barilaro on Friday said he was willing to forgo the title of deputy premier if it stifled him from fighting for regional jobs.
The Premier's comments appear to fly in the face of Member for the Dubbo electorate Dugald Saunders' recent comments when he called for Essential Energy CEO John Cleland to sack himself before dismissing hundreds of regional workers.
"My call to John Cleland would be to pull back and reverse the job cuts decision and look for other ways to find efficiencies within the organisation," Mr Saunders said.
"The Deputy Premier has requested Energy Minister Matt Kean direct Essential Energy not to cut jobs and to work with the Electrical Trades Union (ETU) to find other efficiencies rather than job cuts."
Ms. Mackay said the premier's comments were an "extraordinary turn of events".
"The Premier effectively slapping down the deputy, that's what she has done, she has betrayed people in country NSW and she has betrayed the National Party," she said on Saturday.
Ms McKay said Mr Barilaro had to choose between "kowtowing" to the Liberals or taking a "principled stand" for country NSW.
"If he doesn't then his position as leader is completely untenable," she said. "I say to the deputy premier at a time when we are facing the worst drought in living memory, where every job counts, you need to take a principled stand and you need to rip up that coalition agreement and you need to resign."
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