The long-awaited great koala national park in the north of New South Wales, celebrated by wildlife groups, has drawn a mixed reaction from the state’s Coalition.

The opposition leader, Mark Speakman has hedged his party’s support, saying while he “supports the ambition of protecting koalas”, he was concerned about job losses and the cost of the park.

But Dugald Saunders, the NSW Nationals leader, was more strident, attacking the timing of the decision as appalling and claiming the livelihoods of entire regional towns would be “obliterated” overnight.

The Minns government on Sunday revealed the proposed outlines of the park, fulfilling its 2023 election commitment.

It will reserve 176,000 hectares (435,000 acres) of state forest and connect with existing national parks to create a 476,000-hectare reserve to protect more than 12,000 koalas in the state’s north. A moratorium on logging within its boundaries begins on Monday.

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The announcement was widely welcomed by forest advocates. The Wilderness Society called it a “once-in-a-generation decision” that would give the state’s koalas “a real chance of survival”.

Gary Dunnett, from the National Parks Association, said the “park will ensure future generations will be able to see koalas, greater gliders and other threatened species in the wild for many years to come”.

The environment minister, Penny Sharpe, said the park was “incredibly important” for the future of the species – which has been on a trajectory to become extinct in NSW by 2050. The government hoped it would become an “iconic” destination for tourists.

Speakman said that while habitat protection was an important part of protecting koalas, it was not the full answer. He called the news “a significant announcement, but not as significant as what the Coalition did”.

Chris Minns at Bongil Bongil national park, Bundagen, Coffs Harbour, where he announced details of the government’s great koala national park. Photograph: David Wigley/AAP

“We had a $193m koala strategy, which included funds for scientific research dealing with road strikes and disease,” he said.

“That $193m package was better. It aimed to not just stop the decline but increase numbers,” he said. Speakman said there was a lack of detail in the announcement and it appeared contingent on getting funds from the federal government carbon credits scheme.

When last in government, the issue of koala protections on private land caused friction between NSW Liberals and Nationals and briefly split the NSW Coalition in 2021.

Then NSW planning minister, Rob Stokes, eventually came up with a compromise, which exempted most rural sites from the State Environmental Planning Policy (Sepp) and the Nationals continued in the Coalition.

Timber harvesting within the proposed park’s boundaries will pause on Monday and affected mills – said to be six of over 20 in the region – will be offered transition packages.

The Nationals hold many of the north coast seats.

Saunders claimed the decision would “wipe out 40% of the state’s future hardwood supply” and force up construction costs.

“This decision is almost unbelievable but sadly true to form for a government that has shown a complete disregard for this important industry and what it contributes to our state,” he said.

The NSW premier, Chris Minns, told a media conference in Coffs Harbour on Sunday that 90% of the timber used in housing construction was soft woods, rather than the hardwoods that come from native forest logging.

He said the reduction in wood supply that would occur as a result of ending logging within the great koala national park accounted for about 15-20% of the state’s hardwood supply but only 1.2% nationally. He said establishment of the park would depend on the government being able to win support for the legislation in the state parliament.

The Minns government has so far directed $140m to the park as well as additional funding for tourism and support for workers at affected mills in the region.

The opposition north coast spokesperson, Gurmesh Singh, said the timber industry had suggested a “more manageable” 37,000-hectare option for the park.

“This decision will hurt our communities in the middle of a cost-of-living crisis, ripping out valuable jobs that allow people to put food on the table,” Singh said.

Timber NSW accused the government of valuing “politics above science and people”.

Its chief executive, Maree McCaskill, said the decision showed disregard for the “livelihoods of people in country areas”.

Support for affected timber mills and workers

The park was subject to a lengthy scientific assessment before the announcement, and the decision comes with a broad support package for workers at affected timber mills as well as financial assistance for businesses.

The government is offering priority placement for affected Forestry Corporation workers if they wish to transfer into the NSW national parks and wildlife service.

The government estimates the park’s value as a tourism destination will generate an extra $163m for the state’s economy over two decades. The native logging division of NSW Forestry Corporation has run at a loss for several years.

Sharpe acknowledged there were people who wouldn’t like the decision, but it was incredibly important to preserve one of the state’s most iconic species.

“This area is home to over 100 threatened species. It’s a very important conservation outcome, but it’s also a really exciting opportunity for the mid-north coast in New South Wales,” she said

“We want it to be when people come to Australia, you know, they go and see the Great Barrier Reef, they go and see Uluru and they come and see the great koala national park,” she said.

Sharpe said the government was planning to formally legislate the park next year but issues related to wood supply needed to be worked through with industry first as did a proposal to establish a carbon credit project within the park that is being considered by the Albanese government.

The NSW Greens environment spokesperson, Sue Higginson, who is based in the state’s north, said the long-awaited announcement was a victory for the communities, First Nations leaders, scientists and forest defenders who never gave up.

“Now the government must keep going and protect the Richmond River koala stronghold, commit to the Great Southern Forest national park on the south coast, and end native forest logging across NSW,” she said.