The Government Inquiry in the Havelock North Campylobacter outbreak began in Hastings District Court on Monday.

The contamination of Havelock North water may have come from sheep faeces entering a stream near the town's bores, a court has heard.

The inquiry kicked off in Hastings District Court on Monday. The council's water services manager Brett Chapman spent the whole day on the stand, answering questions put to him by counsel assisting the inquiry, Nathan Gedye QC.

The inquiry is expected to run for two to three weeks. Chaired by retired judge Lyn Stevens, it is looking into the widespread outbreak of gastroenteritis in Havelock North in August 2016, with more than 5000 people falling ill, following the confirmation of the presence of ecoli in the water supply.

MARTY SHARPE/STUFF The Mangateretere Stream outside Havelock North. The stream flows beneath Brookvale Road, and is near the bores that supplied the town drinking water.

Gedye spelled out at the beginning that the contamination had probably come from sheep faeces in paddocks near the Brookvale Road bores that supply the town water.

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CHRIS SKELTON Lyn Stevens is chairing the panel hearing the Inquiry

Subsequent tests had shown e.coli and campylobacter had been found in a pond on the Mangateretere Stream, near two of the council's three bores, he said.

Chapman explained that tests had shown that the bores could draw water from the stream through a permeable layer, and into the reticulated water.

The inquiry heard Hawke's Bay Regional Council had a monitoring bore near the Brookvale bores and that ecoli had been detected in the bore numerous times over several years. But the district council was not aware of the bore until September 2015, when it discovered ecoli in Brookvale bore No 3. It subsequently closed the No 3 bore.

MARTY SHARPE/STUFF Brookvale Road bore No.1, near Havelock North. This is one of the bores at the centre of an investigation into how the town's water supply became contaminated.

Gedye said there appeared to be a lack of communication between the two councils and that more recent correspondence between the two organisations seemed to show things had worsened.

Gedye said the regional council appeared frustrated that the district council had not been working to find an alternative source of water and submissions to the inquiry seemed to "maintain the position that the district council was at fault".

Chapman said this, and the regional council's decision to prosecute his council, had made things difficult "but our focus is not on finding fault but on ensuring safety of drinking water".

MARTY SHARPE/ FAIRFAX NZ Hastings ratepayers are paying dearly for the gastro outbreak that hit Havelock North last August.

The inquiry heard about a 1998 outbreak in the Havelock North water supply, and Chapman said he had not been aware of this event until last year's outbreak.

Gedye and Stevens quizzed Chapman about the fact the council had not seemed to have learned from the experience.

One of the recommendations that followed the earlier outbreak was that the bores should be raised to be above ground. At present they are beneath the ground. Chapman said council had considered this, but given that the consent for the bores expired in 2018 and that the bores were likely to be abandoned, he felt this may have led council to leave the bores as is.

The Inquiry will report back by March 31 with findings on how the Havelock North water supply system became contaminated

how this was subsequently addressed, how local and central government agencies responded to the public health outbreak that occurred as a result of the contamination, and how to reduce the risk of outbreaks of this nature recurring.

It was last week revealed that the outbreak had cost the Hawke's Bay District Health Board $766,000 to date, meaning the event has so far cost the region a total of at least $2.7million.

The health board was the latest to release its costs to date, following Hastings District Council and Hawke's Bay District Health Board releasing theirs earlier this week.

The district council has spent $855,000 to date. This included $271,000 readying itself for the abandoned gastro prosecution by the regional council.

The prosecution, which delayed the Government Inquiry and angered the inquiry panel, was later withdrawn and replaced with the issuing of two infringement fines of $500 each.

The regional council has spent $445,000 on its investigation into the district council and a further $637,310 on the Government Inquiry to date.