A new suburb in Tuggeranong between the existing town centre and the Murrumbidgee River, could affect the health of the "iconic" river, the ACT Conservation Council warns.
And Canberra senator Zed Seselja has accused the ACT government of "tokenism" over the plan to redevelop close to 90 hectares of river corridor and nature reserve into a new suburb of Thompson, saying it doesn't go far enough to address Canberra's affordable housing crisis.
The conservation council's executive director, Clare Henderson, said the organisation was concerned about the reduction of the nature reserve, but hoped for a "genuinely collaborative" process to identify the environmental, heritage and amenity values of the area before the concept went ahead.
"If the proposal proceeds there would be further pressure to undertake more damaging residential development on the west of the Murrumbidgee, [we do] not support development in areas of ecological significance," she said.
Senator Seselja agreed to the proposal "in principle", but said it detracted from the "main game" of opening up land for more homes across the river at the foot of the Brindabellas.
He accused the government of wanting to "be seen doing something" while it was himself and the Commonwealth "driving reform" in the area.
"It's not going to substantially assist the town centre and it's not going to do anything of substance for affordable housing in the southern part of Canberra," he said.
"They've neglected Tuggeranong for so long, they could have done this years ago and they've chosen not to."
His criticisms came as the National Capital Authority's chief planner, Andrew Smith, admitted he was blindsided by the proposed development.
A spokesman said the NCA was unaware of the development until The Canberra Times on Thursday, despite the plans requiring an amendment to the National Capital Plan to proceed.
The NCA declined to comment on the implications of the development until it received a detailed proposal.
But ACT Planning Minister Mick Gentleman said the priority was to involve the community in planning for the suburb as early as possible.
"Now that the idea has been flagged with the people it will affect we will, of course, engage with the NCA," he said.
"We have commenced consultation with the community at this early stage so that their views can be considered throughout the development, not just at the end."
Mr Gentleman said it was "hugely disappointing" Senator Seselja would "seek to block something that had great potential" to renew Tuggeranong's
Housing Industry Association ACT executive director Neil Evans said he expected the Tuggeranong business community to be "rapt" with the plans.
He hoped the area would be expanded and suggested homes could be built close to the river to bring a greater mix of dwelling types, if issues raised in the environmental impact study were addressed.
"I think we're a little bit precious in some respects and conservative," he said.
"All these things can work around the environment ... it's just whether people have the appetite, the mindset and the money to do it."
But Ms Henderson said the conservation council wanted the development to be "well back" from the Murrumbidgee to reduce its impact and more work was needed to identify endangered and threatened species in the area.
Tuggeranong Community Council president Glenys Patulny said the proximity of the proposed suburb to the town centre made it preferable to plans to expand Tuggeranong across the Murrumbidgee.
The council has twice voted to fight Senator Seselja's push to redevelop the area on the western side of the Murrumbidgee due to the ecological strain and the minimal benefits for the Tuggeranong town centre, she said.
"On principle I think [the mooted location of the new suburb] is worthwhile looking at. If it was across the river we're dead against it," Ms Patulny said.
"If you get people in their cars they can go anywhere, they don't have to stop at Tuggeranong, so this development within walking distance of the shops and the Hyperdome has a lot more potential."
But while it was "feasible", Ms Patulny said the "devil is in the detail" when it comes to the impact on the fragile Murrumbidgee ecosystem, in particular the vulnerable Murray cod.
"They really have to have proper water-sensitive urban design, not ad-hoc. It's a pristine area therefore it needs to be treated sensitively taking into account its proximity to the river," she said.
The ACT Greens and the conservation council also flagged concerns about the impact on the biodiversity of the river corridor.
"This is a unique area because it gives Tuggeranong residents an opportunity to use the river corridor, but we need to make sure that our water quality is protected and development doesn't impact on the river," ACT Greens Brindabella candidate Michael Mazengarb said.
Mr Gentleman said initial environmental investigations in the area had been completed but further planning would hinge on more study.
He said on Thursday the development would also depend on an amendment to the National Capital Plan and a Territory Plan Variation.
If the suburb gets the green light, development would likely begin in 2018.