The Senate foreign affairs, defence and trade references committee has recommended annual blood testing of residents, a comprehensive plan for the fishing industry if the contamination causes “permanent or long term fishing closures”, establishment of a joint Defence and NSW Government taskforce to better manage responses, and voluntary acquisition of contaminated properties and homes that are no longer “fit for purpose”.

It also wants Defence to spell out its obligations when it contaminates surrounding areas after the NSW Environment Protection Authority outlined its inability to force Defence to act after fire fighting foam contaminant perfluorooctane sulfonate (PFOS) was detected in water leaving Williamtown Base from 2012 .

The Senate inquiry, initiated by Greens Senator Lee Rhiannon and chaired by Labor Senator Alex Gallacher, was sharply critical of the Federal Government and some departments, and particularly Defence, for failing to appreciate the severity of the situation and showing a reluctance to compensate the community.

But in a dissenting report the two Liberals on the committee, deputy chair Chris Back and Senator David Fawcett, rejected voluntary acquisitions of contaminated properties, annual blood testing, or a comprehensive compensation package for affected fishermen, and gave an indication of the potentially tough line the Federal Government is going to take in response to the contamination scandal.

While the contamination scandal had "clearly had terrible consequences for residents and commercial fishermen affected by the NSW Government's precautionary measures", it was fear and uncertainty that caused the most significant impacts for the community, Senators Back and Fawcett said.

“The committee is concerned that if the mistakes made regarding contamination at RAAF Base Williamtown are not addressed promptly by Defence then they will almost certainly be repeated at other sites in the future,” the inquiry found.

“While there appear to be many points of failure in the response to PFOS contamination at RAAF Base Williamtown, the most acute problem appears to be a lack of Commonwealth Government leadership and a reluctance to take full responsibility.

“The approach of Defence to this issue has been criticised, but also the unsatisfactory engagement of other Commonwealth Government agencies, including the Department of the Environment and the Department of Human Services and Centrelink.”

The Federal Government’s lack of response had "further damaged the affected community”, the inquiry found.

The impact of the spread of fire fighting foam contaminants from the base into surrounding areas for possibly decades, including into waterways and bores, had been “profound” and cast a “shadow of uncertainty” with “real and concrete impacts” for residents and businesses, the report found.

The inquiry heard evidence that the failure by the Department of Defence, NSW Government bodies including the Environment Protection Authority and also Port Stephens Council to make public for more than three years that contaminated water was leaving the base led to mistrust that exacerbated responses.

Community mistrust was heightened after a series of Newcastle Herald reports showed initial public advice about when various agencies knew about contamination was incorrect.

“This is a crisis for those people who have been told they have been drinking potentially contaminated water, that they cannot work or that their property may be worthless,” the inquiry found.

“Unfortunately, this situation has not received a crisis response from government agencies.”

The inquiry rejected Defence arguments that voluntary blood testing of people within the contamination “red zone” around Williamtown base was “not a good idea” because it was not an indication of a level of risk and “creates a huge degree of anxiety”.

“While there may not be a strictly medical reason to undertake blood testing of affected residents, in the view of the committee that should not be the only factor considered,” the report found.

“Voluntary blood testing of affected residents, tracked over time, could provide other valuable information. For example, the results of testing could lead to evidence regarding pathways of exposure.

“It could also be important in determining subsequent entitlements to compensation for health outcomes in the future.”

It recommended that Defence should pay for an annual voluntary blood testing program. 

Defence has initiated a rolling program of auditing and testing at another 16 Australian Defence bases and surrounding areas for fire fighting foam contamination as a result of community action at Williamtown.

Ms Rhiannon praised the Port Stephens community and action groups, backed by many in the broader Hunter community, for forcing government departments at all levels to adequately address a serious environmental and community disaster.

“The tenacity of these residents and action groups has been a great asset to the inquiry,” Ms Rhiannon said.

“Recovery from incidents like this should be focused around community support, environmental remediation and health improvement, not deflections and public relations strategising by government departments.”

Salt Ash residents Gavin and Kim Smith, who moved into the area in 2012, and Williamtown resident Julie Curry, who bought her property in 2014, are within the red zone and want to sell up and leave.

They welcomed a voluntary acquisition program.

“We had some very big aspirations for this place but that’s just gone out the door,” said Mr Smith.

“The tests show our place is contaminated. We loved this place but now I look at the grass growing and I think ‘What’s the point in mowing it?’ What’s the point in doing anything here?”

In her submission Ms Curry said she would never have bought her property in 2014, or made substantial improvements, if she had known about the contamination.

“Full knowledge of this disaster was available to relevant bodies well before we purchased our property, but it wasn’t available to us as buyers,” she said.

The inquiry will hold further hearings into potential fire fighting foam contamination at other Australian Defence bases including Oakey in Queensland, after receiving a substantial number of submissions from people living near the Oakey Army Aviation Centre.

Newcastle MP Sharon Claydon said Defence Minister Marise Payne and the Turnbull Government had to give urgent consideration to the report's findings.

"Labor is disappointed that Coalition Senators have rejected key recommendations related to compensation and health concerns," Ms Claydon said.

"Unfortunately we know that this isn’t the end of the story, as the effects of the contamination will last for years. This report is an important next step in providing much needed support for the people of Williamtown and Fullerton Cove."