"Also, it's unfair if landowners are left to make decisions on how to use and develop their land when water policy and regulation remain uncertain."
She was further concerned about an "unders and overs" approach where regional councils were allowed to degrade some waterways and compensate by improving others.
"We should be, and can be, more aspirational than this. Of course, some waterways may get worse before they get better, but that is no reason to set our sights low."
Dr Wright questioned why estuaries did not feature in the NPS.
"Estuaries are not currently covered by the policy, although they are particularly vulnerable because of their location at the bottom of catchments," Dr Wright said.
"Estuaries are home to many shellfish, wading birds and juvenile fish like snapper, eels and whitebait, and should not be ignored."
She said the Government's review of its water quality policy next year could be an opportunity to ensure that it will actually lead to better water quality in our rivers and streams, our lakes and estuaries and groundwater.
Despite continuing pollution, she said the policy had been a big step forward and some regional councils had already begun to act.
"But we are not out of the woods yet. Some lakes and streams are below bottom lines and many others are not far above them. And in many places, water quality continues to decline."
She acknowledged the dairy industry was facing big economic challenges, as well as environmental ones.
"For instance, high stocking rates that rely on importing feed not only lead to high nutrient losses, but also carry greater financial risk.
"It is encouraging to see the focus on ever-increasing production being questioned, and some win-win strategic thinking occurring."
Green Party water spokesperson Catherine Delahunty described the report as "grim reading" and urged Dr Wright to go further and call for a moratorium on further dairy conversions.
Ms Delahunty noted, how between 2008 and 2012 alone, Waikato lost 18,700ha of plantation forests, while another 28,400ha of land became dairy farms.
Over the same period nationwide, New Zealand lost 9,600ha of plantation forests but increased dairy land by 157,900ha.
"Forests are not only a carbon sink, they are good for water quality as sediment and nutrients don't tend to run off into streams," she said.
"Dairy farms on the other hand are harmful to water quality because of the volume of waste cows produce that leaches into the groundwater and runs off into waterways, so these land use changes are a disaster for our water."
Environment Minister Nick Smith said Dr Wright's report was timely as it would feed into work the Government was carrying out with iwi leaders and the reinvigorated Land and Water Forum.
"Our plan is to have a discussion document out on the next steps in freshwater reform early in 2016," Dr Smith said.
The Government already had work underway on guidance on freshwater management units, exceptions to the national bottom lines, including the Macroinvertebrate Community Index and including coastal lagoons.
"Over the coming months, Ministers and officials will consider all of the Parliamentary Commissioner's recommendations."
Dr Jan Wright's six proposals to safeguard waterways
• Clarify the requirement for councils to "maintain or improve" water quality.
• Provide guidance on freshwater management units.
• Clarify the policy around exceptions to national bottom lines.
• Take a strategic approach to implementation.
• Include the Macroinvertebrate Community Index as a measure of freshwater quality.
• Include estuaries in the National Policy Statement.
