It's a unique variation on the traditional Christmas Eve get-together, a chance for the spectators to catch up with friends and family.
Today Roger Harvey is hoping his affectionate mongrel, Teddy, can swim to his third successive win in the small-dog category.
'Before it starts, they all start to scrap and sniff each other,' said Mr Harvey, 47, a cartoonist from Bangalow, on the far North Coast.
'But then they all become very focused and bark hysterically. Teddy didn't know he could swim until three years ago when he chased another dog.'
When Mr Harvey first entered the contest a few years ago, his mother-in-law, Madeleine Gilmour, gave him 'a withering stare' - upset that a dog swim had taken priority over a family gathering. But these days, with Teddy's success a source of pride, and given the popularity of the competition, the family drinks and dinner have been postponed - if only for a few hours.
Watching Teddy go through his paces yesterday was Ben King, a Scotland Island local and wharf builder whose legendary black kelpie, Diesel, is a repeat winner in the big-dog category.
Mr King, 28, said he was not keen to enter this year's competition, but cited no particular reason. 'Who knows, though? I might have change of heart,' he said, eyeing off a smaller rival.
The Great Scotland Island Dog Paddle is one of Sydney's sillier institutions. That's why it's important. Legend has it that some years ago a famous champion died before the race, was fibreglassed by his owner and then towed to victory on a long rope. And I had to blog something in case anybody thought I'd been taken by a shark.
Xmas is strange in this part of the world. We sing endless songs about snow, which most of us have never seen, and fantasise about a white Christmas when the thermometer is registering around 35 Celsius. You used to be able to buy spray cans of artificial snow to apply to your windows...
After that, competitive dog paddling even by deceased dogs, seems less surreal.