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Background: Watch and wait (W&W) in complete clinical responders after neoadjuvant chemoradiotherapy has increasingly robust data supporting its oncological safety. Recently, studies have assessed the real‐world costs of this strategy compared to surgical resection. Our aim was to compare our oncological safety and costs associated with operative and surveillance strategies to international literature. Methods: Data were retrospectively collected and analysed via electronic health records from March 2014 to March 2021 in Christchurch, New Zealand. Two cohorts were created based on intention to treat. All hospital events were recorded and costed, as well as oncologic outcomes. Our primary endpoints were the cumulative cost of both strategies, 3‐year survival rate, and disease‐free survival. Results: Forty‐eight patients were identified who had rectal cancers resected (OT) with a yPT0N0 pathology, and 42 who were on the wait‐and‐watch (W&W) audit after having a clinical complete response. After exclusions, we identified 38 OT and 23 W&W patients; the W&W group were more co‐morbid (P = 0.05), had worse functional status (P = 0.008), higher BMI (P = 0.34) and more favourable clinical tumour staging (P = 0.01). The operative treatment (OT) group (n = 38) had more acute admissions (34% versus 13% in W&W, P = 0.08, OR 0.29). There was a 35.7% (n = 8 of 23) local recurrence in W&W and none in the OT group (P ≤ 0.001), with successful salvage in the W&W with local recurrence in 71.5% (n = 5 of 7). Three‐year distant metastasis‐free rate was 97.3% in the OT group and 90.9% in W&W (p = 0.05). Overall survival was 100% (W&W) and 94.7% (OT); (P = 0.019). Care in the OT group cost more than W&W, accounting for local regrowth management; $NZ70,759.56 versus $NZ47,905.52 (P = 0.014). Conclusion: This study found better oncological outcomes in the OT group, whilst the W&W group had reduced morbidity and acute bed days. The cost of wait and watch was approximately two‐thirds that of operative treatment, even accounting for salvage procedures for local regrowth. [ABSTRACT FROM AUTHOR]