If the closure happened, Cromwell would be swamped with freedom campers, the Central Otago District Council said.
The council gave a verbal submission yesterday to the Economic Development, Science, and Innovation Committee on the Self-Contained Motor Vehicle Legislation Bill.
The Bill requires a certified self contained vehicle to stay overnight on council managed land as the Government looks to clamp down on freedom camping.
Council senior strategy adviser Alix Crosbie told the select committee the council supported the Bill overall but had some concerns over unintended consequences it would have for the council.
They were centred on the absence of any funding mechanism to pro-actively manage freedom campers and the cost of enforcement.
Crown agencies and their funding was outside the scope of the Bill.
Ms Crosbie said Central Otago was a popular destination for campers and was right next to the Queenstown tourist district.
It was the fourth-largest district in the country by area — about 10,000sqkm — yet only had 14,569 ratepayers.
There were designated Crown land camping sites around Lake Dunstan, managed by Land Information New Zealand (Linz).
The sites had minimal facilities and were available for short-term stays only.
Rules and length of stay were monitored and enforced.
The council paid for the basic facilities at these camps, not the Crown.
Ms Crosbie said the ideal scenario would be the provision of camping facilities in the district and the Crown able to fund it, but the Crown was looking to get out altogether, she said.
"We are also aware that, in Central Otago in particular, Linz is struggling to cope with the level of freedom campers on those sites and have indicated the potential to close, if we did not fund it.
"We have immediate concerns that closing those three sites would immediately flood Cromwell.
"Linz have told us they do not have funding mechanism or budget to fund it."
She also said small councils should be in a group which would have a defined approach to freedom camping, different from bigger councils.
