Ratepayers could be on the hook for hundreds of millions of dollars after the Redlands council skimped on sewerage maintenance in a decade of underspending on the critical system, a councillor has warned.

Insiders say the council will now need to cough up at least $35 million a year on the system, but there are fears the ultimate price will be much higher after the city only spent half its allocated budget on water last year.

The council’s seven wastewater treatment plants, which service almost 60,000 households, are operated by the council-owned company City Water. The body returns an annual dividend to the council, which then funds the service.

An eighth treatment plant has been built recently with the help of the state to service the Shoreline development on the southern edge of the council, which was approved without a sewage plan in 2015.

In its latest financial statement for the 2023-24 financial year, City Water estimated its spend on existing infrastructure over the next five years would be about $55.7 million annually. In 2022-23, it predicted $23.3 million. The year before it forecast $39 million.

Last year, City Water spent just $14 million of its $27 million capital expenditure budget.

The local government has since launched a review into the issue, with long-term councillor and wastewater services spokeswoman Wendy Boglary claiming the council had been skimping on wastewater infrastructure since it took over the service in 2012.

“I’ve been accused of banging on about it for a number of years,” she said.

“My concern is ratepayers now will be impacted by work not done in the past.

“We have got some tough decisions, and challenging financial decisions, ahead of us to make sure our water assets continue to be maintained.”

The review would highlight where the most urgent work was needed, said Boglary, who called for City Water’s profits to be fed straight back into the business rather than being filtered through the council.

“City Water does make a profit which, in my opinion, should be used for City Water. That’s why it’s raised – to cover the costs,” she said.

In 2023-24, the last year City Water reported, the company had an after-tax profit of $8.7 million. The year before that, it recorded a $15 million loss. In 2020-21, it raked in $20 million.

The average amount budgeted for wastewater infrastructure maintenance over the past 10 years has been roughly $12.5 million, though this has seen an uptick recently, with $28 million budgeted this year and $20 million the year before.

The lowest budgeted amount for wastewater infrastructure upkeep was $3.5 million in 2019-20.

A council spokesperson did not directly reply when asked whether an annual spend of $35 million was now required to meet projected needs, but conceded the system was under pressure.

“Much of the Redlands Coast’s water and wastewater infrastructure was initially commissioned in the 1970s-1980s and, coupled with high population growth in the city over the past decade, some of this infrastructure is now reaching renewal or replacement age, or needing to be expanded,” a spokesperson said.

“This is not unique to Redland City.”

The review was a proactive step to get ahead of issues the system might face, the spokesperson said, adding the council was not getting enough money from developers to cover the costs of their infrastructure needs.

The spokesperson called on the state to increase the cap on how much councils could receive from big developers, saying: “The current cap is well below the actual costs to service.”

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.