Teacher Allison Griffiths said the explosion caused panic.
"Everyone saw the flames sweeping down the headland, so we all started to move," she said.
"People were rushing to get in their cars and that caused a huge tailback. It was a bit of a nightmare."
Several fireworks landed on scrub on the opposite side of the river to the crowd, starting two separate fires. Members of the rural fire service were at the scene and quickly extinguished one blaze.
The wounded had minor injuries and were taken to Whakatane Hospital as a precautionary measure.
Aaron Anderson, an employee of Whakatane's Radio 1XX, told nzherald.co.nz he and a colleague were on their way to the event when they heard a huge explosion and the sky turned orange.
He said a number of car alarms were triggered after being hit by the shockwave from the explosion.
Kiwanis Club secretary Leigh Barker was unclear what caused the problem and said club officials were to meet rural fire service members this morning to discuss the issue.
"It was a peacock-style explosion along the water rather than in the air."
Kiwanis had run the display for the past 28 years with no problems of this nature, Barker said.
He said they had learned a lesson for next year: "We'll probably try to make it go properly."
Riddick said the township would be asking questions.
"Obviously something this spectacularly wrong will have an inquiry."
The incident was the most serious in a night that stretched fire crews across the North Island after a relatively quiet Guy Fawkes period.
Fire communications recorded 107 callouts between 9pm and midnight.
Southern communications shift manager Riwai Grace said it was "busy as".
"But compared to previous Guy Fawkes nights the drop-off's been amazing," Grace said.
Auckland firefighters battled a scrub fire on Hospital Rd, Otahuhu, while Wellington crews battled a large blaze on the Paekakariki hills and another in Stokes Valley.
Levin recorded a burning building in Cambridge Street and fire investigators will examine the scene early today.
Dunedin police dealt with a serious housefire in Pine Hill that destroyed one house and damaged another and occupied six appliances, while Palmerston North fire crews dealt with a half-dozen couches set ablaze by rowdy students.
Northland fire service also reported a busy night, dealing with another two scrub fires.
Despite 55 callouts in three hours, Auckland shift manager Megan Ruru was pleased.
"We were prepared for a busy night."
- with NZ HERALD STAFF
