Wagga City Council has blamed an unknown party for the "deliberate and illegal" sealing off a drain from Lake Albert in an attempt to improve its water levels.
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Council general manager Peter Thompson said he condemned the "unlawful erection of shutters on Tatton Drain" and the action might have "dashed council's hopes for the NSW Government to grant a permanent water solution to Lake Albert".
The council is due to meet with NSW Water Minister Pavey on February 2 after submitting a proposal to use water diverted from the Murrumbidgee River to top up the lake.
Mr Thompson said the council became aware on Wednesday that unknown persons had secretly erected shutters to the culverts on Tatton Drain where it passes under Lake Albert Road.
The council itself explored sealing off Tatton Drain in late 2018 to prevent rainfall from exiting the lake.
The NSW water regulator advised the council at the time that it would need to buy a water entitlement to divert the drain.
Under the NSW Water Management Act, interfering with a water supply carries a maximum penalty of $500,500 for an individual.
Lake Albert Forum member Garry Williams said it was unfortunate that someone had taken an apparently unlawful action that could jeopardise negotiations with the government.
"Somebody in the community has taken this action obviously out of frustration that we haven't been able to complete a fix for Lake Albert's ailing ability to service the community," he said.
Mr Williams said raising the lake's water level was vital for sports events and tourism in Wagga.
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"This facility has been there since 1900 and there's a need for all levels of government to allow us to enhance it," he said.
Steel shutters have been placed across a concrete channel that runs through O'Halloran Park near the intersection with Lakeside Drive.
The council has notified the Natural Resource Access Regulator (NRAR) and NSW Police and expects to be issued with a direction to remove the shutters.
"The NRAR is the regulatory authority and Council will be complying with any direction it receives," Mr Thompson said.
"Unfortunately, the action of erecting the gates will probably make our application to [Ms] Pavey, even harder."
Ms Pavey's office has been contacted for comment.
"I am really quite devastated...so much work and effort has been put into persuading the [Water] Minister to back us and this happens," Mr Thompson said.