The inquiry panel chaired by retired appeal court judge Lyn Stevens found in their follow-up report that the contamination of Havelock North's water supply wasn't confined to that region, with water suppliers across the country sharing those problems and many not meeting minimum compliance levels.
Water in Auckland and Wellington is safe, but one-fifth of New Zealanders could be drinking water that is not "demonstrably safe".
Water quality has been a vexed issue for political parties, with the previous administration attempting to find consensus through the Land and Water Forum, while the ruling Labour Party was forced to drop its planned tax for commercial water use by coalition partner NZ First, although they do plan to impose a levy on drinking water exports.
Proposed new rules for water supplies could put extra financial strain on the country's smallest councils.
It's the second stage of an inquiry launched following the August 2016 water contamination in Havelock North, which left 5000 people sick.
"These findings point to a widespread systemic failure among water suppliers to meet the high standards required for the supply of safe drinking water to the public", the report said.
As much as 9000 kilometres of water pipes from as far back as the 1950s needed replacing around the country, at a cost of $2.2b, according to the report.
Speaking after the report's release, Attorney-General David Parker said the inquiry had made a clear case for mandatory water treatment.
Parker said mandatory treatment was not as controversial as it used to be, with a number of cities with large populations making the change in the a year ago.
"It's all very fine saying these standards have to be met, but if you don't address how it's going to be paid for, and who's going to pay for it, then you haven't really tackled the issue", said president Dave Cull.
Mr Cull said some communities, like Christchurch, were proud of having untreated water, and could be reluctant to fork out money - especially if the risk of getting sick was low.
"One of the things the report makes clear is that central government has for at least five-years known that water supplies have not been doing their duty and the Ministry of Health and those responsible for them have effectively failed New Zealanders".
We have noted the recommendation that the Auditor-General be invited to monitor the implementation of the recommendations and initiatives in the Havelock North drinking water inquiry report.
However the government hadn't yet decided if it would help.
The Minister of Health, David Clark, says the report raises serious concerns about oversight and infrastructure that can be laid at the feet of the previous National government.