Defence Minister Marise Payne has raised the prospect of the government buying back contaminated land around some defence bases, or compensating owners.
But it will only consider what to do once it receives full environmental assessments of the impact of groundwater contamination, caused by chemicals from firefighting foams used at bases such as Williamtown, NSW, and Oakey, Queensland.
Senator Payne said the government had already offered to fund blood tests and counselling for residents. It's conducted extensive water testing.
She said the outstanding question was what to do about affected properties.
"Once we have environmental site assessment data, once we have our ecological data, then we will be in a much better position ... to make decisions around what happens to that land in terms of whether we engage in buybacks or compensation, or whatever it might be," she told reporters in Canberra.
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The contamination comes from firefighting foam used throughout the world by civilian and military authorities, including the Australian Defence Force, from the 1970s to the mid-2000s.
Aqueous Film-Forming Foam (AFFF) is regarded as the most effective way to fight dangerous fuel fires as could occur in an air crash.
Defence firemen practised extensively with AFFF at air bases, especially RAAF Williamtown and the army helicopter training base at Oakey.
Defence discontinued use of AFFF after international research found it contained chemicals - PFOA and PFOS - which could persist in the environment for decades. Both have been detected in groundwater outside the Williamtown and Oakey bases.
Defence says there are no internationally recognised studies showing exposure to PFOS and PFOA harmed human health. Neither does there appear to be any way to clean up this contamination once it's in the environment.
Lawyers for a group of Oakey residents say a US scientific panel concluded there was a probable link between exposure and a range of medical problems including kidney and testicular cancer.
This isn't just Defence's problem.
AFFF was used by civil authorities and has been detected at Brisbane airport.
Senator Payne recently held a meeting with Williamtown residents and plans to meet Oakey residents.
She said this was a legacy issue which posed a significant challenge for defence and the government, as these contaminants were enduring and pervasive.
"They don't break down and for abundant caution, we are very careful about the health warnings and the environmental approach that is now being taken," she said.
