Mr Somers said the problem had been investigated several times since 2004 but there was no evidence anything had been done.
The 2004 study put the cost of fixing inflow and infiltration problems at $3.8 million. A 2006 study put the cost at $6.6 million but concluded the main problem was the poor state of infrastructure.
Mr Somers estimated upgrading the system to cope with one-in-one-year storms would cost more than $12.5 million. An upgrade capable of handling one-in-five-year storms, with bigger pipes and more storage, would cost more than $23.1 million.
The cost, which is likely to be borne by Kaitaia ratepayers, would be significant whatever approach was taken. Every property owner could also face an extra bill of up to $1500 if required to fix his or her own wastewater pipes.
Mr Somers recommended the council investigate further, set aside $25,000 for a business plan, and install sensors at the Bank St and Pukepoto Rd outlets for better data about the frequency and volume of spills.
Kaitaia's sewerage network has seven outlets allowing sewage to overflow when the system is overloaded. Their purpose is to stop sewage from overflowing onto private property.
With no money set aside for the upgrade, it would have to be included in the council's 2015-25 Long Term Plan, Mr Somers said.
Infrastructure committee chairman John Vujcich said the new councillors only learned of the problem a few weeks ago and immediately informed the regional council.
"We weren't aware how bad it was," he said.
During storms the amount of water entering the system was far more than it was designed for. The problem was compounded by Kaitaia's flatness, making it hard to move large volumes of water quickly.
Mr Vujcich said sewage overflows were heavily diluted by rainwater but were still unacceptable. The council was looking for a solution that was both affordable and resilient.
Far North Mayor John Carter said deferred maintenance and under-investment was a serious problem not just for Far North wastewater systems but also water supplies, roads and community facilities such as halls.
Once the council had quantified the problem in dollars it would hold a series of public meetings.
"We think this is a serious issue. There'll be no secrets or hidden agendas, we'll let people know as soon as we can," Mr Carter said.
When similar problems became public in Whangarei in 2008, protests spurred the Whangarei District Council into action.
It has spent tens of millions upgrading its wastewater systems to reduce spills into Whangarei Harbour. Whangarei, however, has ten times more ratepayers than Kaitaia to carry the cost.