Sydney crane smash could have been fatal

The arm of a crane lays in the water after falling from a floating worksite in Syndey. (AAP)

A metal wire which snapped from a collapsed crane on Sydney Harbour and landed on Luna Park's face entrance could have killed someone, a union says.

A metal wire which snapped from a collapsed crane on Sydney Harbour could have killed someone when it flung across to land and hit Luna Park's iconic face entrance, the Maritime Union of Australia says.

The 220-tonne purpose-built crane, which sits on a barge off Milsons Point, plummeted into the water after 1pm on Tuesday when its cable snapped.

The barge was ready to be relocated and four workers were attempting to remove enormous mooring blocks under the water when the wire snapped.

A section, which was connected to a metal hook weighing about half a tonne, was flung across to land and came to rest on the Luna Park face.

While nobody was injured, Maritime Union of Australia spokesman Paul Garrett said the outcome could have been far worse.

"It only has to go a couple of degrees either way and someone's dead," he told reporters at the scene.

CFMEU NSW secretary Brian Parker pointed the finger at SafeWork NSW - which has overall responsibility for workplace safety - and the state government for relying too much on self-regulation in the construction industry.

The section of wire hung from Luna Park's famous face before it was removed using a cherry picker several hours after the incident.