A leaked report shows a south-east Queensland council neglected its water and sewerage systems for two decades, diverting millions of dollars from the service provider it owned while the network fell behind.

The report, compiled by Create Advisory for Redland City Council, found the council had not focused on what the system needed, instead redirecting funds to other parts of its budget.

A slideshow presented to councillors in reaction to the report in November 2025 said the council would need to spend at least $35 million a year on wastewater treatment plants, on top of another $10 million annually to bring the network up to scratch.

One slide depicts two council officers cowering in fear from a copy of the report.

“We can’t respond to, nor fix, what is probably 20 years of under-investment overnight,” the next slide reads.

“This will probably need to be a decade-long conscious, progressive, reinvestment back into these networks.”

Those networks are run by council-owned City Water, which operates seven sewage treatment plants and services more than 70,000 households in the bayside council area, south-east of Brisbane.

However, Create found the council was pulling more money from City Water than it could afford, and based budgets on indexations of past years rather than real needs.

“[Operation expenditure] is restricted and capital works deferred to accommodate the achievement of the planned financial outcome for the council as a whole,” the report said.

City Water only spent $14 million of its $27 million budget for asset upkeep and purchase in the 2024-25 financial year, a trend Create said opened the council up to potential “financial reporting distortions”.

“Actual capital works are also consistently undelivered,” the report said.

The council knew there was an issue. In a 2024 City Water report to the Queensland government, the business estimated it would need to spend $55 million on sewerage infrastructure over the next five years. Over the previous five years, it had spent just $5 million.

During that period, council had been taking 80 per cent of City Water’s profits in dividends – as much as $16 million in 2021.

Create said City Water was not given the autonomy it needed, and had the lowest staffing levels of any comparable business – 1.8 employees per 1000 connections – while simultaneously charging the highest tariffs.

The effect was a strained business that was forced to rely on contractors for a growing number of jobs.

In the four years to 2024, the number of breaks in the water mains per 100 kilometres of pipe more than doubled from three to eight. That year, the council lost 10 per cent of all the bulk water it purchased, worth more than $5 million.

While that breakage number was below the average for a network that size, the council estimated it would reach 25 bursts per 100 kilometres by 2035 if nothing was done.

The report also noted City Water was dismally behind on their fire hydrant inspections, which could land the council in trouble if it was found legally responsible for a hydrant failure during a fire.

In one financial year, just 4 per cent of the hydrants that were due for five-yearly inspections were looked at.

A council spokesperson said 1350 fire hydrants had been refurbished since February through a preventative maintenance program.

They said the council was investing $25 million in water and wastewater work this year, and had hired 24 additional City Water staff.

“The investment supports critical renewal, replacement and upgrade projects across the water supply network, wastewater collection system, and wastewater treatment infrastructure,” they said.

When rumours of the problem emerged late last year, long-term councillor and Redlands water spokesperson Wendy Boglary told this masthead she was worried ratepayers could be left holding the bag.

“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.”

Four of the council’s wastewater treatment plants are at, or past, capacity, with major developments expected to bring sharp population growth to the region.

The Cleveland plant is already past capacity, the slideshow showed, with the population about to surge as the 8000-home Southern Thornlands Priority Development Area is built.

On the cost of sewerage treatment plants, the slideshow’s author said $35 million would not cut it.

Deputy Premier Jarrod Bleijie has promised state and federal funding for sewerage infrastructure in the Southern Thornlands PDA, but how it will be treated, and where that effluent ends up, is unclear.