The Government inquiry into New Zealand's drinking water has been told councils must be prosecuted for contaminations.

The second stage of hearings into the Havelock North water contamination is underway, almost exactly a year since three people died and more than 5000 were struck down from the campylobacter outbreak.

The outbreak last year made some 5500 of the town's 14,000 residents ill with campylobacteriosis. It put 45 in hospital and has been linked to three deaths.

International drinking water expert Dr Colin Fricker says there must be penalties if suppliers don't have a functioning water safety plan.

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Dr Fricker says if councils don't have that, then it's people's lives at risk.

The final stage of the Havelock North water inquiry began with recognition this week was the first anniversary of the outbreak which swept through the village in August last year.

Inquiry panel chairman Lyn Stevens said stage 2 of the inquiry was about recognising water was life-giving and precious.

"We should all pause to remember those who died, those who became sick and those whose businesses were disrupted," he said.

"This is important not only to the people of Havelock North but all New Zealanders."

The inquiry was expected to continue all week this week, and began with disussions of water issues with a panel of national and international experts comprising Dr Colin Fricker, Dr Dan Deere, Iain Rabbitts, Dr Chris Nokes and James Graham.

This panel generally agreed the universal principals for drinking water safety were to protect the water source; to have multi-barrier protection against potential contamination; and to have the ability to respond quickly and effectively in the event of any sudden or extreme change in water quality, flow or environmental conditions.

Later today, the discussion will turn to water treatment and whether all drinking water supplies need treatment such as chlorination.

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- Reporting from Newstalk ZB and Hawke's Bay Today.