Unions, business groups and the Opposition urged caution from Mr Garrett yesterday after he declared the environment was bigger and more important than the economy.

As Australia faced the worst economic downturn in decades, Mr Garrett told the Environment Institute of Australia and New Zealand that his priorities were clear.

"Given the serious environmental and economic challenges we face it is worth restating that the environment is not a subset of the economy.

"Indeed, it is the other way around," he said.

It sparked concern from groups such as the Construction, Forestry Mining and Energy Union.

Its forestry chief Michael O'Connor said Mr Garrett was peddling a "ridiculous debate".

"Unfortunately, Peter seems to be still trapped in 'it's that or it's this'," he said.

"People who try to say that one of these things is more important than the other in my view are attempting to set up a ridiculous debate … neither is a subset of either."

The Opposition also pounced, with National Party Leader Warren Truss warning "it is hard to be green when you are in the red".

"When next (Mr Garrett) has to sit in front of an expenditure review committee he will find out how hard it is to obtain the kind of financial commitment he would like in tough economic times," Mr Truss said.

"We need to continue spending in the environment but there may be some things that are not so affordable now."

Victoria's industry lobby also sought to correct Mr Garrett.

"The environment and the economy are not subsets of each other, nor are they mutually exclusive," said Chris James, spokesman for the Victorian Employers' Chamber of Commerce and Industry.

"They are mutually reinforcing and supporting.

"It becomes more difficult to manage and care for the environment without a healthy economy that creates wealth — many of the countries with major environmental problems also have developmental problems in the economic sense."