I think you might be referring more to dead dogs which I believe sparked Sydney's giardia and crypstosporidium water crisis several years back.
Living dogs that are well cared for (read disease free) are probably cleaner than most kids.
Printable View
The 1998 giardia and cryptosporidium problem was caused by a significant influx of animal (cattle) faeces into the Warragamba storage after a long drought period when the 1997 drought broke in a quite significant rain event. Warragamba went from around 60% to full over a few weeks (and that was the last time it was full).
Martyn
I seem to remember (but have no evidence to support it) there was some question about the lab conducting the tests (the results varied widely day-to-day).
The version of the story about Sydney's giardia (which anyone with access to the facts is free to refute if they like) is that in Sydney they were using a test that was sensitive enough to enable them to detect levels of giardia that places using less sensitive tests could not detect.
The claim was that other places probably had as much giardia but weren't using a sensitive enough test to be able to detect it.
As I said, that may not be true, but it makes a good story.