Independent Launceston MLC Rosemary Armitage raised the comments during a Heritage Tasmania budget estimates hearing on Tuesday afternoon.

"I must admit I drive past regularly and I thought, when are they going to finish painting that," Ms Armitage said. "And I was sitting next to [the developer] Errol Stewart at the football and I said to Errol, 'have you run out of paint or what's the problem'?"

"And he said, 'no, no, no, that's as far as it goes', because the idea of Heritage was ... that to show the signage you had to leave it as it was."

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Ms Armitage thought the sign should be repainted to its original state because, as it stood, "all it's showing now is how it's been weathered."

She added this was the view of "100 per cent of people" she had spoken to. "And I understand where Heritage are coming from but I don't agree with them," Ms Armitage said.

Responding to the comments, Heritage Tasmania director Pete Smith said travelling around the state people would come across "ghost signs".

"Which are essentially signs from the past that are still evident on buildings today. And that's part of the heritage fabric of those places," Mr Smith explained.

He said in the C. H. Smith example, part of the development application involved painting the Cimitiere Street-facing wall in white to match the facade.

But in considering the application, the Heritage Council recognised the heritage significance of that sign was important. "And so preserving the ghost sign as it was was agreed as part of the conditions," Mr Smith said.

"One of the things you might do by painting an old sign anew and making it look new is that you diminish its heritage values, you diminish the edge of that building so to speak and the values are compromised.

"And so in making the decision they did in regards to progressing the development of that site - which is terrific after all this time - the Heritage Council made a decision to ensure there was a condition that preserved the ghost sign for the future."

[Read more on the ghost signs of Launceston]

The Tasmanian Heritage Council issued the permit for the redevelopment back in 2017, which included a condition the sign be retained and "not be painted over except to the lower section of the wall below the word 'Blue'."

Last month, the Launceston Historical Society also posed the question on social media: "Should the ghost sign on the C.H. Smith building be left as it is or re-painted?"

"If it's left it will disappear over time, if it's repainted it would be a reminder of what the buildings once were."

Graffiti had previously covered the lower half of the sign, which reads "C. H. Smith & Company, Wool & Grain Stores, Wholesale merchants" along with the words "Reckitts Blue".

The latter a is reference to the laundry product of the same name, introduced to Australia in the 1880s, which added a blue dye to washing in order to reverse the yellowing of white fabric. The company behind Bluo, sold today, traces the current product back to that iteration.

Developers Errol Stewart and Scott Curran have previously said it was their dream to retain as much of the original site as they could - and add to it. It was this focus that helped the approval of the project, Mr Curran told a group tour of the site in late April.

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