Clutha District Mayor Bryan Cadogan said major expense was coming and New Zealand looked set to face this with an inefficient, weak and fragmented structure.
A lot of work was needed for Three Waters infrastructure, but councils lacked clout when there were so many of them and few were joining forces, he said.
"We’re having to upgrade the plants," Mr Cadogan said.
"We can wait no longer and we have no negotiating strength."
Mr Cadogan said a country as small as New Zealand should be covered by four or five regional water entities.
It was instead headed for more than 40 and such a structure was "worse than antiquated", he said.
In an opinion piece for the Otago Daily Times, Mr Cadogan said that was a dangerous outcome.
Government reform had not resulted in the level of change that was plainly needed, he said.
"Fundamentally, nothing has changed," Mr Cadogan wrote.
"We are now stuck in no-man’s land. Not only have we failed to get the efficiencies required, but we have also taken a long time to achieve little."
He hoped the public might now recognise the truth in what people had been saying all along, Mr Cadogan said.
"If we don’t sort this out immediately, people are going to be bankrupted, they will lose their homes and suffer financial hardship.
"Looking back on the last 10 years, I can’t believe that collectively we have been too shallow to do the right thing by our fellow Kiwi.
"With so many councils wanting to be the winner, or refusing to get out of their bunker, there is blame on all sides."
Councils had to submit water plans to the government by September 3 and show why such plans would be financially sustainable.
Mr Cadogan said the plans might meet the test, but that did not necessarily mean the results were sustainable for communities.
Sharp rates rises could be required to get the work done and the government was not looking to put money in to ease the situation, nor force councils to group together, he said.
"There’s still far too many groups clamouring over the same limited resource.
"We don’t know what each other’s doing, and we’re clamouring over each other for what is a limited resource in the contracting sector, and so consequently we don’t have bargaining strength and we have no real control."
The scale of upcoming work for Three Waters necessitated the "cavalry" to come over the hill in 2027 to meet the challenge, Mr Cadogan said.
"Instead of it being the cavalry, we’ve now got 44 draught horses coming over the horizon."
