Sydney Water should not be reverting to building old-fashioned sewage outfalls that will pump untreated effluent into Sydney Harbour when so much has been done to clean it up, the New South Wales Opposition says.

The organisation is constructing 25 new overflow pipes around the harbour and other waterways, including planned structures at Mosman and Putney and one that is about to be built at Drummoyne Wharf.

In a statement, Sydney Water said the pipe at Drummoyne would be positioned about eight metres out into the Parramatta River and the overflow was only expected about twice a year.

"The position of the wastewater emergency relief structure minimises any impacts to human health and on aquatic species and vegetation habitat," the statement said.

"The wastewater released during extreme wet weather is highly diluted and is around 99 per cent water."

Sydney Water said the outflows were regulated by the Environment Protection Authority (EPA) and prevented the sewage from overflowing back into people's bathrooms and laundries during extremely heavy rain.

It said similar measures were widely used in all wastewater networks across Australia and around the globe.

But Labor's environment spokeswoman Penny Sharpe said the new outfalls were outdated and a "cheap fix".

"In 2016 there should not be 25 locations where raw sewage is finding its way into our water ways," she said.

"There are modern solutions where sewage is not just simply pumped into the waterways yet it appears that Sydney Water just do not have the money to be fixing it and that is unacceptable."

She said there were solutions available that were able to store effluent during stormwater events.

"They are then able to treat it and release it in a safe way," Ms Sharpe said.

"We've spent decades cleaning up Sydney Harbour.

"This is a backwards step and a quick fix if we allow raw sewerage just to go back into the waterways every time it rains."

'No deterioration in the situation': Premier

But NSW Premier Mike Baird said the use of overflow pipes was a common practice that had been used on regular occasions.

"The advice I have is there is no deterioration in the situation, there is stormwater that runs off regardless," he said.

"What they're trying to do specifically in this instance is to look at a situation where stormwater comes into local sewage and has impacts at local residences and their land."

Mr Baird said this situation would only happen in "heavy, heavy rainfall".

He said it was best to rely on the experts to provide a solution.

"Those experts at Sydney Water are consulting with EPA and Health [Department] and providing appropriate solutions," Mr Baird said.

"I think Sydney water is doing everything it can be and should be to ensure customers are looked after and there is no negative impact in terms of the overall solutions they are providing."

NSW Premier Mike Baird said the use of overflow pipes was a common practice. ( AAP: Nikki Short, file image )

Mr Baird said on an ongoing basis Sydney Water would have to make significant infrastructure decisions impacting entire communities or regions, together with bespoke solutions for a smaller amount of households.

"What Sydney Water must do is make appropriate decisions in those circumstances and must make sure there is value for taxpayers in those circumstances.

"Obviously, they want to invest as required but want to keep our waters bills as low as possible and that's overseen by a regulator."

Sydney Lord Mayor Clover Moore said the harbour was the city's "jewel".

"To be talking about polluting the harbour with outfalls now is again going back to the 50s," Cr Moore said.

Dividends should be put into modern fixes: Opposition

Labor's Ms Sharpe said Sydney Water's actions came at a time when the Government had been increasing the dividends it had been taking from water utilities.

She cited figures from a recent auditor-general's report, which showed that from 2014 to 2105 the dividend the Government took from Sydney Water increased by $412 million.

When combined with the increased dividends from other water utilities, Ms Sharpe said the Government was raking in an extra $1 billion.

"The auditor-general indicated that last year the Government took $1 billion out of water utilities to go into consolidate revenue for the Government," she said.

"It needs to be allocating some of that money to modern infrastructure fixes that are going to ensure that raw sewage doesn't end up in the harbour.

"The Government has gouged Sydney Water to bump up its bottom line; that's clear from the budget papers and it's clear from the figures from the auditor-general."

Sydney Water defended its spending on sewerage infrastructure.

Penny Sharpe, pictured at a Labor Party event, has spoken out against Sydney Water's decision to pump sewage into Sydney Harbour. ( AAP: Dean Lewins, file photo )

"Sydney Water's expenditure on wastewater infrastructure alone last financial year was over $358 million and we have invested over $2 billion in total capital expenditure since financial year 2010-2011," a spokesman said.

A spokeswoman from the officer of Minister for Primary Industries, Lands and Water Niall Blair denied the dividend payments were taking away from infrastructure.

"Sydney Water's dividend payments to government are not expected to place additional pressure on services, quality or reliability," she said in a statement.

"Sydney Water continues to make significant investment in the city's water infrastructure to ensure the reliability of the system and the protection of public health and the environment."