NSW's top water bureaucrat Gavin Hanlon is facing charges of misconduct after an interim report into allegations of water theft in the Murray-Darling Basin was submitted to the state government.
The report, released on Monday, found an urgent fix is needed in NSW to repair an "ineffectual" water-compliance and enforcement system with little transparency.
Investigated by former head of the National Water Commission, Ken Matthews, the report follows an ABC Four Corners program in July which revealed allegations of water rorting, including that Mr Hanlon helped irrigators undermine the Murray-Darling Basin Plan.
NSW Opposition Leader Luke Foley says the report reveals a "deliberate industrial scale theft of water" in which a "blind eye was turned" by the National Party's administration.
Mr Foley called on the Nationals to be stripped of the water portfolio and insisted Regional Water Minister and deputy leader of the Nationals, Niall Blair be removed from his position.
"One of the great rivers of Australia - the Darling River, has been the lifeblood of far western NSW for centuries, is dying on this government's watch," he told reporters in Sydney on Monday.
"The Nationals running regional water policy is like leaving Dracula in charge of the blood bank - we can't have it."
This was backed by the NSW Greens with spokesman Jeremy Buckingham saying it's a conflict of interest for the Nationals to be in charge of water as the party accepts political donations from irrigators.
"There is an inherent conflict of interest of making water allocations subservient to the interests of the agricultural industry," Mr Buckingham said in a statement.
However, Mr Blair refused to address whether the Nationals face a moral conflict of interest in accepting political donations from irrigators.
"I don't handle any donations, that's something that is held by the party head office ... this is not about me or my political party, this is about those who rely upon the water," he told reporters in Sydney on Monday.
"There are many irrigators right throughout NSW who have done nothing wrong and unfortunately as a result of these allegations people are looking at them like it is some sort of crime to be an irrigator in NSW."
Mr Blair admitted water compliance in NSW had been an issue for "decades" but did not address whether this had emboldened people to continue offending.
Along with Mr Matthews' probe, the allegations of water theft had been referred to the state's Independent Commission Against Corruption.
To date, there are five separate inquiries or reviews that have been proposed, launched, or widened to address issues raised in the Four Corners program.
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