Sunday’s protest was organised by Catherine Hill Bay Boardriders’ Club and addressed by club president Mick McCall, Catherine Hill Bay Progress Association president Sue Whyte and Labor’s Swansea MP Yasmin Catley.

The three speakers rallied against the plan, which developer Rose Group says is needed because it wants to develop the land that presently receives the treated wastewater.

Mr McCall said it wasn’t just the pumping of wastewater into a lagoon, it was the fact that people swam in the creek and the lagoon opened up to the sea right at a place where people swam, surfed and fished.

But Solo Water, which operates the water and sewage system, hit back at its critics, with spokesman Brad Irwin saying that “the old, failing septic systems” in Catho had been polluting the water for decades, with “the existing situation posing the greatest health risk”.

Protest organisers disputed this assertion.

The lagoon proposal is being examined by the Independent Pricing and Regulatory Tribunal, which licenses the Beaches estate’s private water and sewage system, operated by Solo Water.

IPART has received 195 submissions on the proposal, with Lake Macquarie City Council, the EPA and others raising concerns. The NSW Department of Health, however, has not objected, as Solo pointed out on Sunday.

Ms Catley said it was developer Rose Group’s responsibility to “provide the infrastructure to meet the needs of the community that they have developed” and pumping wastewater into the lagoon – even if treated to “a very high quality, I’m sure” – was not the way to do that.

Mr McCall said the protest was called to raise awareness about the threat to the beach and its environment. “It’s also a warning to other beach communities, that if the developer gets away with doing it here, then others might try to do the same thing at other beaches,” Mr McCall said.

The battle between Rose Group and the Catho locals is the latest spat in a long line of disputes that began as soon as developer Bob Rose and his family company bought 365 hectares of former mining land from Coal & Allied in 2002 with plans to create 1000 housing lots.

At the height of the controversy a decade ago, then planning minister Frank Sartor was found by a court to have wrongly approved the project, which had been second-last on a departmental list of priority sites for rezoning and development.

By the time it was finally approved in 2011 permission was given for 550 sites on the headland between Catho and Moonee Beach to the south, with authorities setting design principles it said related to the “sensitive” nature of the area.

Ms Whyte and the progress association warned at the time that it still believed the estate was an over-development. 

At Sunday’s protest, Ms Whyte said that whatever “design principles” had been applied, the end result was a headland full of huge houses, most of them two storeys and utterly out of keeping with the historic nature of the two old villages of about 100 cottages in total.

She said the original plan had been for the Rose Group development, a Coal & Allied subdivision at the northern end of the beach and the Murrays Beach estate a few kilometres north to all contribute to the cost of bringing the sewer to Catho. But this had not happened and so the two villages remained unsewered.

Solo environmental engineer Brad Irwin said the Beaches treatment works produced “high-quality recycled water that is already used by residents to water their vegetable gardens and wash their clothes, among other things”.

Mr Irwin said Solo had plans to connect the existing village to its system to “help the village get off the septic tanks and improve water quality in the beach lagoon”.

He said residents had asked about being connected to the Beaches scheme.

Ms Whyte denied that sewage was running into the lagoon already, saying those on septic tanks had them pumped out regularly, while other homes had upgraded to “envirocycle” style self-contained systems.

“They are trying to put out there that we are polluting the water,” Ms Whyte said. “We are not.” She said Solo had to come up with a better alternative.