The Gold Coast City Council has announced it will cease the use of services from its water retailer after a concerted community campaign against rising water prices.


The council voted 8-7 in favour of splitting from Allconnex, a move that the council chief executive believes will cost around $60 million.


The Queensland State Government has responded with threats of overriding the council’s decision, with Water Utilities Minister Stephen Robertson calling the move “crazy stuff”.


However Premier Anna Bligh has announced that the State Government will not interfere in the council’s decision.


Allconnex has said that it maintains respect for the council while defending their consistant 3% cost increases.


“We were building a business with a view to long-term efficiencies," Allconnex chief Kim Wood told ABC Radio.


"There's no doubt we could have saved money and produced a much more efficient outcome than individual council water businesses."


Mr Wood has promised to restrict the price rises to inflation rates in a bid to placate a number of Queensland Local Government’s who have become increasingly disillusioned with price hikes.


The company forecasted price rises of 70 per cent over the coming six years, stoking discontent with the Gold Coast, Logan and Redland councils. However, Mr Wood said that his company had identified $500 million in savings across the three council areas.