SOUTHERN Downs ratepayers could see their water rates rise by more than $100 each year for the next decade, according to a document tabled in State Parliament on Tuesday.

The Queensland Audit Office report found Southern Downs Regional Council asset sustainability would decline in the next 10 years.

A case study revealed it would cost the council $46.2million to replace council-owned water assets over the next 10 years, compared to the $18.9million the council could afford to spend in the planned renewal forecast, a discrepancy of $27.3million.

In 2022-23, the asset register indicates 42% of water pipes will have reached the end of their useful lives, but SDRC is not forecasting corresponding renewals as it does not know the pipes' condition.

The study concluded the council would need to raise water rates by 19% per rateable property per year for 10 years to fund the shortfall or risk not supplying drinking water.

CEO David Keenan said the council was reviewing asset classes and conditions to inform infrastructure renewals, beyond the Water and Wastewater and Stanthorpe Water Effluent Asset Management Plans it has now.

He said it was expected the council would soon report an operating surplus, and would be required to do so for the next three to five years to ensure long-term financial sustainability.

"The asset sustainability ratio is at the level it is due to the absence of Asset Management Plans that would otherwise direct a higher level of renewal of assets in the capital works program,” Mr Keenan said.

"Council has Water and Wastewater Asset Management Plans, and the Stanthorpe Water Effluent Asset Management Plan, which was only recently adopted by Council.

"In relation to roads, drainage, community buildings and open space, there is a significant amount of work to be done to ensure that there are updated Asset Management Plans in place.

Council is in the process of undertaking review of the asset classes and conditions that will inform the renewal of existing infrastructure and result in an updated Asset Management Plan that will inform the capital works program.

"Until the condition assessment of the pipes is done the cost of the renewal cannot be estimated, thus the proposed rise in water rates cannot be determined.

"There is a significant amount of work to be done to ensure there are updated Asset Management Plans in place for roads, drainage, community buildings and open space.”

"In relation to roads there is a longer term capital works program, but this requires a major review.

"Additionally, local governments have the opportunity to apply for infrastructure funding, which includes water infrastructure, from both the State and Federal Government, which may offset a percentage of, or all other the costs involved.”

Mr Keenan said it was important the council maintain the long term financial forecast as a financial management tool and to manage debt levels and repayments, though it was no longer a regulatory requirement for Queensland councils.

He said the council welcomed the recommendations of the QAO report and it was a good opportunity to obtain feedback on the policies and procedures that are currently in place.

"All nine of the recommendations that have been put forward by the QAO are consistent with the financial management practices that are currently being implemented by council,” Mr Keenan said.

"The report from the Queensland Audit Office very much focuses upon Local Government authorities living within their means.

"This approach is consistent with the financial management and practices that are currently being implemented at Southern Downs Regional Council.”