A NSW government minister appears to be thwarting plans to fast-track major projects during COVID-19.

Coffs Harbour MP Gurmesh Singh has called for work on a planned cultural hub on the state's mid-north coast to be paused due to a downturn sparked by the COVID-19 pandemic.

Local Government Minister Shelley Hancock backed the call in a radio interview this week.

She said it was “foolish and rash” for the council to move forward on the $76.5 million Cultural and Civic Space during the coronavirus pandemic.

“My view is [to] pause it, otherwise I'm going to pursue some legislative changes about this,” Ms Hancock said.

“This is a really bad message to send to a community that is totally divided on this.

“It's not necessary at this stage when every council, state, and [the] Federal Government are trying to direct hard earned resources … toward COVID-19.”

Coffs Harbour Mayor Denise Knight has criticised Mr Singh’s letter to councillors and his motion to pause the project.

The motion was defeated by the mayor's casting vote, breaking a stalemate between councillors.

The council wants to fund the project by selling four of its buildings and applying for a loan from the State Government's financial authority, TCorp.

But Ms Hancock says COVID-19 legislative amendments prohibit loans for works on council offices, meaning the Coffs Harbour City Council could not borrow money.

“In that context, I've asked [the council], in agreement with Gurmesh Singh, that we pause the project until we come through COVID,” she said.

She warned further law changes may be used prevent the council from borrowing the money for the cultural hub.

Coffs Harbour City Councillor Sally Townley supports planned Cultural and Civic Space.

“There seems to be this sentiment that if you don't say nice things to and about the member, if you dare to disagree with them, then you will be punished and the Government will withhold money,” Cr Townley says.