Authorities intervened after hundreds of young people - drunk and not wearing life jackets - paddled flimsy inflatables to a Central Otago island to drink on the beach.
The area's deputy mayor, Calum MacLeod, said those attending the "loosely organised boating and drinking party" could have drowned.
About 500 young people paddled to Ruby Island, in Lake Wanaka, for the party yesterday.
When the scale of the event became apparent in the early afternoon, the local harbourmaster contacted police, who in turn called in the Wanaka Coastguard.
Mr MacLeod, who hitched a ride to the island with the harbourmaster, was unimpressed by what he saw.
Most partygoers were in "flimsy inflatables" and had large amounts of alcohol with them, he said.
Many were too drunk to paddle back to the mainland on their own. No-one enforced the lifejacket rule, nor kept track of participants on the return trip, he said.
One man was pulled from the water with his lifejacket draped over his arm because he was incapable of putting it on. He told rescuers he could not swim.
Others who appeared to be heavily intoxicated were turned back to the island as they tried to paddle to the mainland. They were told to wait for a ride with the Coastguard.
"Things would have gone horribly wrong if the wind had got up," Mr MacLeod said.
"It was the classic bad combination of alcohol and boating... if the harbourmaster's team and the Coastguard hadn't been there, some of them would have come to grief."
"If you get pissed and fall down at a land-based event you just end up looking like an idiot. However, if you get pissed and fall out of a small inflatable boat you could die."
Mr MacLeod said Ruby Island was not the right place for that sort of event. Had the organisers approached the council for a resource consent, they would have found that out.
"There is one long-drop toilet, they hadn't made any provision for food and water, or first aid," he said.
People lit a fire on the island, in breach of the restricted fire season. The harbourmaster ferried volunteer firefighters to the island to make sure it was extinguished.
The coordinator of the Ruby Island management committee, Jude Battson, said for 20 years locals have been working to restore and maintain the island.
Ms Battson said she would speak to the council about installing a warden on the island for two weeks around Christmas, to ensure appropriate behaviour on the island.