The Minerals Council of Australia claims that the federal government's "same job, same pay" plan will lead to higher costs, job insecurity, and more red tape for businesses and communities.
The government is seeking to stop companies paying labour hire contractors less than permanent staff for the same work, a change supported by workers unions.
But the Minerals Council says it "will hurt communities and small businesses in the Hunter region at a time when they need greater support and job security".
"The costs of running a small business have skyrocketed, with rising energy prices, materials and supply chain constraints pushing some operators to the brink," Minerals Council CEO Tania Constable said.
"It is therefore alarming that the federal government would undertake complex workplace changes, right now, that will lead to higher costs, greater job insecurity, and more red tape for small businesses and regional communities.
"These ill-conceived workplace changes threaten to remove the valuable link between mining companies and the vast number of small businesses throughout the Hunter that are brought on as contractors.
"Mining companies and small businesses are heavily reliant on each other in the Hunter, providing a valuable economic contribution to regional towns and cities. The mutually-beneficial relationship is the lifeblood of the region and should be protected, not imperiled."
The Mining and Energy Union said the laws would close the loophole that allows companies to avoid paying the wages and conditions negotiated under site enterprise agreements by outsourcing jobs to labour hire companies paying just above the legal minimum.
The union has also accused the Minerals Council of running a "scare campaign".
However Ms Constable says instances of companies exploiting labour hire to lower labour costs were "limited".
"Its scope is extraordinarily broad," she said. "The government says it is about just fixing a small problem, but in reality it will smother the economy.
"It captures, in unprecedented ongoing complexity, every business that provides workers, services or skills to another company, whether they be sub-contractors like tradies, catering companies, construction teams, or cleaners."
