Melissa Price who worked at the Penguin Centre for seven months changed the mood of the whole dinner when she asked the question during a Q & A on why penguin eggs are being destroyed at the centre.
Mr Philp explained that no breeding had been allowed at the centre due to government regulations and the need for permits.
The centre on Granite Island has now a permit for two penguins to be bred each year.
The 200 strong crowd was stunned, which included Member for Finniss Michael Pengilly, Leader of the Liberal Opposition Steven Marshall, City of Victor Harbor mayor Graham Philp, Alexandrina Council mayor Kym McHugh and Professor Sonia Kleindorfer.
The penguins bred at the Granite Island Penguin Interpretive Centre are weened by staff and then passed onto Flinders University and not released back on the island.
"You go to a dinner to help preserve the Little Penguins on Granite Island and many did not know that eggs are being destroyed each year," Ms Price said.
"Last year nine eggs were destroyed and that is nine penguins that could have been released back into their natural habitat on Granite Island.
"It is important the money raised from the night is directed to helping Granite Island penguins, as many were under the impression that is where the nights's fundraising was going.
"A secondary pond needs to be built and more breeding permits.
"Melissa's daughter Jeni worked at the centre for 18 months and said "I cried every time I had to destroy the eggs."
"Why can't we release them here?
"When we do breed them, we ween them and then have to give them up to Flinders University.
"The funds raised should go to here, as the money raised could help us build an extra pond and we could release the penguins back to their natural environment," Jeni Price said.
The dinner was the initiative of City of Victor Harbor mayor Graham Philp.
Penguin numbers on Granite Island have declined alarmingly from 1548 penguins in 2001 to only 26 in 2012 and the evening was organised to raise funds to research why.
"We need to research the plight of Little Penguins throughout the state and to identify exact numbers and whether they are endangered," Mr Philp said.
"Qualified researchers have identified the highest risk factor to Little Penguins on Granite Island is the New Zealand Fur Seal.
"In a report researchers suggested Little Penguins be listed as vulnerable and this has not be done. Why?
"We know for a fact they are endangered on Granite Island, but are still regarded as a common species.
"We need a breeding program on Granite Island, as at present the Penguin Centre, cares for injured penguins.
"Professor Sonia Kleindorfer who spoke on the night on penguin research and animal behaviour said captive breeding is not a solution.
"You only consider captive breeding if we can release Little Penguins back into a safe environment," Professor Kleindorfer said.
Mr Philp said the $9000 raised is being held in the Victor Harbor & Port Elliot Lions Club bank account.
"It will stay in this account until we work out where the funds would be best utilised to benefit the Little Penguins," Mr Philp said.
"We need to raise $150,000 for a total state count on Little Penguins and for DNA testing.
"Somehow we need to raise this so we can focus on Granite Island.
"We need a breeding program on Granite Island and to achieve this we need local banks and large business in the community to become involved, who at this stage seem to be shy to stand up.
"Small business have now become aware of the issues and have put their hands up."The dinner was held on Friday, June 14.
State wide problem
John Ayliffe manager of the Kangaroo Island Penguin Centre at Kingscote and Deidre Morrison from KI attended the dinner and appreciated the efforts of mayor Graham Philip and the Victor Harbor community in making people in the wider community aware of the decline in penguin numbers.
"The event was very timely, as I visited the state's largest penguin colony on Pearson Island last month," Mr Ayliffe said.
"The state government claims there are 12,000 penguins on Pearson Island, off the West Coast of South Australia, but after walking on it for 10 hours I only heard one penguin.
"I later spoke to a cray fisherman who said he was there in March and he saw no penguins either.
"After visiting a number of other islands I would suggest that penguins have gone from abundant to nearly extinct in South Australia in the blink of an eye and the government has no idea it has happened.
"I am of the opinion these penguins were eaten by New Zealand Fur Seal last year.
"This is the largest loss of a species in this State that I have seen in my life time."
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