Last year's gastro outbreak in Havelock North is unacceptable for a developed country, the government says.
An official inquiry, which released its initial findings (PDF, 2.2MB) today, has criticised Hastings District Council and Hawke's Bay Regional Council for failing to safeguard the town's drinking water.
It found neither had substantial plans in place to deal with the campylobacter contamination, which was likely caused by sheep faeces.
More than 5000 people fell sick in the outbreak in August last year. It might have contributed to three deaths.
Attorney-General Chris Finlayson said all councils should take note of the findings.
"All local authorities need [to] immediately - not wait until Stage 2, immediately - check their processes. There is nothing more fundamental to the citizens of this country than clean water."
Mr Finlayson said the report was highly critical, but would not say whether heads should roll.
Regional council chairman Rex Graham disagreed with the findings, saying he felt it performed its duty to protect public health.
Hastings District Council said it accepted the findings.
Inquiry chair Lyn Stevens, reading from the report this afternoon, said the councils' failures did not directly cause the outbreak.
However the outcome might have been different without them, he said.
Heavy rain had flooded paddocks near Brookvale Rd and led to the contamination of a pond then the aquifer and the drinking-water system.
Contamination might also have occurred via roadside drains in the same area.
Once people started getting sick, the response was "generally well handled", particularly by Hawke's Bay District Health Board.
"There were, however, significant gaps in readiness, such as the district council's lack of an Emergency Response Plan, draft boil water notices and up-to-date contact lists for vulnerable individuals, schools and childcare centres."
Mr Stevens said the regional council's awareness and handling of the risks to the aquifer had fallen short.
Hastings District Council, meanwhile, "did not embrace or implement the high standard of care required of a public drinking-water supplier", particularly given a similar outbreak in 1998.
The report singled out the district council's mid-level managers, who it said delegated tasks but did not follow up with adequate supervision.
"This caused unacceptable delays to the preparation of a Water Safety Plan, which was fundamental in addressing the risks of an outbreak of this nature."
The council was also found to be lacking in its maintenance of plant equipment.
The report also criticised the drinking-water assessors working with the council, saying they were "too hands-off" and should have made sure it was carrying out its responsibilities.
It said the two councils might have avoided the outbreak if they had worked more closely together.
Hawke's Bay Regional Council chairman Rex Graham disputed that his council had failed to protect public health.
"The aquifer is the lifeblood of my family and all the other families on the Heretaunga Plains and we would do nothing to fail to protect it or the people that live on it, so I would dispute that," he said.
"I'd like to read the report a little bit further and find out exactly how they arrived at the point that we failed to protect public health.
"But where I'm standing right now, without that detail, I would emphatically say that we have performed our duty to protect public health."
Hastings Mayor Lawrence Yule said he thought the findings were fair and he acknowledged multiple agencies, including the district council, had fallen short.
"I think the findings are fair, balanced and reflect what actually happened, so I think they've done a good job and we accept the findings," he said.
None of the failures - across himself, the two councils, an engineering consultancy firm and the drinking-water assessors - were found to have directly led to the contamination.
"It's what they call a Swiss-cheese model, where a whole lot of little things go wrong - none of them deliberate - but they've allowed this contamination to occur."
He said he would not be resigning from his role before he was due to step down in June.