The Gundagai community is demanding to know why the hospital site was privatised in late 2014 for $110,000, only for it to be privately onsold last month for $650,000.

The squandered fortune would have been injected into “equipment and capital works” in the Murrumbidgee district public health system.

Town leaders – including deposed mayor Abb McAlister – have maintained they would have bought the hospital at the $110,000 “firesale” price to establish not-for-profit aged care, but were told the government would not sell for any less than $400,000.

Health minister Jillian Skinner has ducked calls from Tumut-based upper house Labor MP Mick Veitch for a departmental inquiry, passing the buck to local bureaucrats for a second time.

Mr Veitch claimed Mrs Skinner is “all care and no responsibility on this issue”.

“The people of Gundagai just want to know process was followed and everything was above board,” he said.

“Someone has to provide an external, independent, open and transparent inquiry into the process.”

Mr Veitch accused Mrs Skinner of flouting the Westminster tradition of ministerial responsibility, which demands a minister take ultimate responsibility for what her department does.

“Someone's got to take responsibility and in our system of government that is the minister,” he said.

“If it's not going to be (health) minister Skinner, it has to be (finance) minister Perrettet. 

“I don't think it's fair local bureacurats wear the blame if they were following process.”

Labor has been baying for Mrs Skinner's sacking for months, pointing to the St Vincent's chemotherapy under-dosing scandal in April and a recent report revealing two babies were poisoned by gas – one fatally – when they should have received life-saving oxygen.

In a written statement, chief execuitve of Murrumbidgee Local Health District (MLHD) Jill Ludford dismissed any impropriety.

“The old Gundagai Hospital was independently valued and approved for sale by auction in 2013,” Ms Ludford said. 

“The property was listed on the open market. At auction, the property was passed in then listed for sale with an appointed local real estate agent. 

“NSW Health’s valuer determined that in light of significant asbestos remediation costs, the final sale offer was reasonable in the open market provided that all known remediation costs were disclosed to the purchaser.”