The Ministry of Defence has known about the presence of chemicals used to fight fires in groundwater around the Ohakea and Woodbourne air bases since August - but testing for contamination has only just begun.
Environment Minister David Parker said he was not aware of any acute health risks from short-term exposure to PFOS and PFOA chemicals, which were historically used to fight and train for flammable liquid fires but have been banned in New Zealand since 2011, except for specific purposes such as laboratory analysis.
Parker said the previous Government was told of the issue in August.
"My understanding is that this was reported by the Ministry of Defence to the minister in August this year. As soon as I became aware of it, I indicated that I thought those who have water bores that need to be tested should be informed as soon as possible.
"I'm not yet clear on who knew what when. I don't want to overstate the health risks - I just want to investigate whether there is a problem."
The revelation comes a day after a damning report found widespread failures in Government and local authority systems to ensure safe drinking water around the country.
Parker said the chemicals were routinely used until about 2005, but today the groundwater levels of PFOs and PFOA on the airbases are above safety guidelines.
"As a result we wish to test the water of properties neighbouring the bases, to see if their water is contaminated. The advice of health officials, based on what we know right now, is that there is no acute human health risk, but it is prudent to test drinking water."
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He could not say how widespread the chemicals were used or for how long, but it was likely used in aviation and fire-fighting services.
"It's most concentrated use was at airports. We are talking to other organisations whose firefighting activities may have used these compounds," Parker said.
Staff from the NZDF and Ministry of Health are already contacting potentially affected properties and talking with residents.
Results from the testing are expected in mid-January.
Aviation firefighting foam with PFOS and PFOA was standard from the 1970s until the early 2000s because it could put out liquid fuel fires quickly.
Yesterday a Government Inquiry released its final report into the outbreak of water-borne disease in Havelock North last year that made a third of the 15,000 residents sick and was linked to three deaths.
The inquiry slammed councils and the Health Ministry, which are usually responsible for safe drinking water, detailing "widespread systemic failure" and inept enforcement that failed to improve, even after the Havelock North crisis.
The inquiry said at least 721,000 Kiwis outside of Auckland and Wellington - and possibly hundreds of thousands more, including tourists - were drinking water that was "not demonstrably safe", leading to about 100,000 people suffering water-borne diseases each year.
It made 51 recommendations, including universal chlorination of drinking water, which the Government has noted will be controversial and costly. Christchurch City Council has already scoffed at the idea of treating its water.
Christchurch is the largest New Zealand city to have unchlorinated water, drawn from aquifers and piped directly to homes. Treating the water supply would cost $100 million-$150m.
Local Government NZ has also said it would be an expensive process.
The Government is likely to set up an independent body to oversee safe drinking water, and is considering sanctions for failing to supply safe drinking water.
The Government has written to mayors and DHBs around the country, urging them to check water supplies as it urgently considers the inquiry's 51 recommendations, including stronger laws and regulations to enforce standards.
The inquiry said exemptions for permanent chlorination should only be made in "very limited circumstances".
Health Minister David Clark will bring recommendations to Cabinet before Christmas.
Parker said the Ministry of Health, as well as local authorities, had "effectively failed" New Zealanders.
"In the last five years there have been no compliance notices issued by the Ministry of Health, and no enforcement action taken against any local authority that has been failing to supply water in accordance with the standards."
The Government has yet to decide how much money it would commit to ensuring that all drinking water is up to an acceptable standard, Parker said.
Christchurch city councillor and Canterbury DHB member Aaron Keown told Newstalk ZB's Larry Williams chlorination would "go down like a bucket of sick" and would provoke protests in the city's streets.
But Water New Zealand's John Pfahlert said aquifer water may start out pure, but the reticulation system used to get the water to houses could introduce cross-contamination.
Chlorination was "the cheapest, most effective means of ensuring public health that you can get", Pfahlert told Williams.
"It's been around for a century. Effective drinking water treatment is a well proven technology and if you get the dosage right you shouldn't even be able to taste it."
The inquiry viewed the latest data for 2016-17, which showed that the 721,000 people drinking potentially unsafe water was "a significant underestimate".
Hundreds of thousands more may be exposed to poor drinking water, considering that the figure does not include about 625,000 New Zealanders who drink water from self-suppliers or temporary suppliers, nor does it include tourists who visit non-compliant townships.
Punakaiki, for example, gets 500,000 tourists a year and is on a permanent "boil water" notice.