Currently, compulsory contributions from developers help pay for roads, footpaths, parks, playgrounds, and many other community services and facilities.

Council says under changes proposed by the state government, developer contributions would be channelled into four regional funds, with no guarantee that the money would be used for projects in the local government area where it was collected.

Mayor Peta Pinson said if the changes go ahead, there could be significant consequences for the Port Macquarie-Hastings community.

"These include, before approving applications to rezone land for development, council would need to be confident we could afford the infrastructure and the facilities the development would require - which may significantly slow the pace of development," Cr Pinson said.

Council's CEO Dr Clare Allen said it will come at a cost to the local community.

"If we lose this important source of funding, council would have to consider increasing rates to pay for vital infrastructure - sadly, the cost could be shifted from developers to ratepayers," Dr Allen said.

"As the council representing one of Australia's fastest growing regions, Port Macquarie-Hastings would potentially struggle to keep pace with the needs of its expanding community, while at the same time money collected from local developments could be taken out of the area and spent anywhere in the state."

Cr Pinson said the community should be fully consulted on the details of the new Infrastructure Contributions Bill.

LGNSW president Linda Scott claimed the NSW government had tried to sneak the changes through Parliament in budget week to avoid scrutiny, but the peak association for councils successfully pushed back and the legislation was sent back to an Upper House Committee for review.

The mayor encouraged concerned residents to contact the local state member about the proposal.

Member for Port Macquarie Leslie Williams said it is disappointing that council has chosen a media campaign to raise concerns about planning reforms when it has previously agreed that the infrastructure contributions system isn't delivering the services needed to support growing communities.

"I commend the council for their submission authored by group manager Duncan Coulton, to the Parliamentary Inquiry and note that it acknowledges that the current system is broken and needs reforming," Mrs Williams said.

Council's submission said 'local governments have insufficient revenue raising capacity to maintain or upgrade their significant infrastructure holdings or provide the level of services that their communities desire'.

"The infrastructure contribution reforms are a once in a lifetime opportunity to make our planning system better and I hope that council will work with government rather than against them in making sure this happens," Mrs Williams said.

"We know that as it stands the infrastructure contributions aren't delivering the services we need to support growing communities.

"What the community wants to see is that where there is substantial residential growth we want the roads, the parks, the sporting fields to be delivered in a timely way to support those communities.

"The program of reform to infrastructure contributions was announced by the Premier and the Minister in 2019 and was then subject to a Productivity Commission Review in 2020 focused on building the system we need to support new homes, better connected and well planned communities.

Mrs Williams said modelling underpinning the Productivity Commissioner's recommendations have been public since November 2020. The Legislative Council then referred the Bill to a Committee for Inquiry which made a number of recommendations including delaying the passage of the Bill until the detailed policies and regulations underpinning implementation are released for public comment. The Minister accepted this recommendation.

"The council made a submission to the Parliamentary Inquiry in early July so they have been well aware of the conversations about this Bill for some time," Mrs Williams said.

"Council will still have control of local infrastructure contributions to invest in essential local services to support growth.

"Regional infrastructure contributions will not replace or take any money away from local infrastructure contributions revenue.

"We will not be taking money off councils to fund the government's own infrastructure pipeline.

"The Minister has made it very clear that councils will not be worse off as a result of these reforms. The reforms will mean more money not less for meeting the infrastructure needs of local communities.

"The Bill does not impose the sorts of restrictions that councils are claiming in the media. The Bill includes important reforms for local government, such as the ability to directly dedicate land for public open space and services at rezoning and significantly reduce costs to councils in the planning process."

The NSW government will release the detailed policy and regulatory package for consultation next month for an extended exhibition period.

Local Government NSW (LGNSW) made clear its opposition to the infrastructure contribution rule changesat a Parliamentary hearing in July.

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