NSW Health ordered Hillsong to immediately stop singing and dancing at a summer camp in Newcastle, after videos emerged on Thursday showing hundreds of young attendees doing so, without masks, inside a large tent while a band performed onstage.
The camp began days after changes to public health orders took effect, banning singing and dancing at music festivals and forcing the cancellation of events including the Tamworth Country Music Festival and the Grapevine Gathering in the Hunter Valley.
Singing and dancing at large events presents a high risk of COVID-19 transmission, Chief Health Officer Dr Kerry Chant said, amidst an outbreak which has seen the state record tens of thousands of cases a day.
While the church again defended the event in a statement on Friday, saying it was not similar to a music festival, it also apologised.
"We regret giving any perception that we were not playing our part to keep NSW safe and we sincerely apologise to the community at large," the statement said.
"Our heart is for people, and loving and caring for all people is at the core of our church."
The statement said the camp events differ from festivals in that they are alcohol-free, held outdoors, and the students attending each camp - about 200 - are part of the same social network.
"Over a three day duration the percentage of time spent singing is minor," it said.
While NSW Police on Friday morning initially ruled it out, Dominic Perrottet later said the organisers of the camp should be fined.
The maximum penalty for a corporation found to breach the public health orders is $55,000.
The order does not apply to religious services, but it does apply to major recreation facilities.
Mr Perrottet on Friday said the health minister had been advised by his legal team that Hillsong had broken the rules.
"If the legal teams believe that it was in breach of the public health order, then my expectation would be that a fine would be issued," he said.
The premier joined a chorus of Australian music acts in saying he was shocked and outraged to see the footage.
"I echoed the frustration and anger other people right across the state felt," he said.
"Even if technically it was within the rules, it certainly wasn't in the spirit of the rules.
"If we have to tighten loopholes, we will."
NSW Police earlier on Friday said the church will not be fined, and police will instead liaise with organisers "to ensure future compliance".
The event has drawn ire from Australian artists, with acts including Jack River, Illy and Odette criticising the event as demonstrating a double standard.
"There are rules in place that just aren't right," Sydney pop-rock duo Lime Cordiale wrote on social media.
"Festivals, clubs and pubs are closed whilst Hillsong are getting close and sweaty... confusing?"
Meanwhile Brisbane band Ball Park Music described it as "just heartbreaking for everyone in our industry".
