Two men on the barge suffered minor injuries and were treated by NSW Ambulance paramedics before being taken to hospital," a NSW police spokesman said, the Sydney Morning Herald reports.
Witnesses took to Twitter to describe scenes of chaos as the barge sank.
The SMH reported that the incident happened about four minutes into the display, when a malfunction caused some of the fireworks to set the barge alight.
"Video posted to social media shows revellers enjoying the show before a fiery explosion prompts some in the crowd to cry out, as fireworks appear to go off "uncontrollably"," the newspaper reported.
"Daina Pace described the moment 'fireworks went terribly wrong' in a Facebook post, writing that after the barge caught fire, "fireworks continued to go off uncontrollably in each direction'."
Safe Work NSW will investigate.
Meanwhile, a spectacular firework show later lit up the sky above Sydney Harbour, highlighting the city's New Year's celebrations.
The massive fireworks display included a rainbow waterfall cascade of lights and colour flowing off the harbor's bridge to celebrate recently passed legislation legalizing gay marriage in Australia. Over a million people were expected to gather to watch the festivities.
Security was tight, but officials said there was no particular alert. Sydney officials said the event would generate some $170 million for the city and "priceless publicity." Nearly half the revellers were tourists.
