Co-governance in three waters is about the Crown meeting treaty obligations, and maintaining relationships between councils and mana whenua, Local Government Minister Nanaia Mahuta says.
She says the proposals have been subject to misinformation, and rejects any suggestion co-governance is linked to He Puapua or water ownership.
The Water Services Entities Bill passed its first reading in Parliament last night, with co-governance one of the main points of contention in the proposal to shift drinking, waste and stormwater management from councils to purpose-built independent entities.
Mahuta told RNZ there were two reasons behind the co-governance aspects, which guarantee mana whenua equal representation with councils on an oversight group.
"Part of it is because the Crown must uphold its Treaty obligations. When I consider as Minister the conversations that I had with councils around the features of reform, many councils raised the issue with me that they have really good relationships with iwi and mana whenua and so they wanted to make sure that in some shape or form we were able to carry those relationships forward.
"The other thing is that several treaty settlements that have been reached also have obligations that are carried through in terms of the relationship with their waterways. And so it was important to ensure that Te Mana o te Wai aspirations could be achieved through this reform programme as well."
She completely rejected the idea it would lead to Māori ownership of water.
"In fact, co-management arrangements are at the strategic level - that is not at the professional board level - who will have a focus group of directors to undertake that role."
She said any suggestion it had anything to do with the He Puapua report was a "mistruth in its entirety".
"This has been evolved and iterated as a result of a lot of conversations in trying to ensure that we were keeping faith with those conversations with councils and stakeholders, with iwi, but also upholding the Crown's own obligations under the Treaty."
The ACT Party has been the most strident opponent of the co-governance aspect in Parliament.
"And that's the worst aspect of these reforms. Co-governance is divisive, it's dangerous, it's totally inappropriate to give up a seat at the table just because of who their ancestors were," Local Government Spokesperson Simon Court said.
He acknowledged Māori were a Treaty partner with the Crown, and Māori had rights and interests in water generally, but argued this did not extend as far as the proposed model.
"Yes, the Crown did sign a Treaty of Waitangi with iwi and hapū and what it gave iwi and hapū in exchange for ceding their sovereignty to Queen Victoria was protection of their private property rights, protection of the chieftainship - of their status - and protection of their customary lands."
That "cedeing of sovereignty" is one of the main contested points of difference between the English and te reo Māori texts of the Treaty, but Court said nothing in any interpretation of it extended to giving Māori the right to be "appointed onto boards to govern how public assets like water, for example, are prioritised or funded and allocated."
However, that's where the entity boards - which are appointed based on competence - differ from the regional representation groups where the co-governance provisions apply.
Internal Affairs (DIA) - the department managing the three waters legislation and the transition to the four entity model - described the relationship between these two groups.
"The board would develop the strategy, appoint the chief executive, monitor the execution of the strategy, but the board needs to be answerable to someone ... the board of the water services entities will be accountable to the regional representative group, who is there to represent the community's interests," Chief Advisor Nick Davis said.
Court said it was perfectly normal for councils to be consulting iwi Māori on plans relating to water services, but that was "completely different" to establishing co-governance over public assets.
He maintained the RRGs would have significant decision-making power.
"They will set the scene through their constitutions as to what the entities in their region prioritise ... they will also get to appoint the board members. So it beggars belief that they won't have significant influence - if not over the day to day operations - at least on the strategic direction of what investments are made."
National also opposes co-governance, but has not been as forthright as ACT in its criticism.
Its Local Government Spokesperson Simon Watts disagreed with his ACT colleague, saying the RRGs would mean diluted decision-making power for councils and mana whenua alike. This is because the group must make decisions by consensus or, failing that, with a 75 percent majority vote.
"The reality is, not everyone agrees. And that's going to cause, I believe, some pretty significant issues around the decision-making process in those entities," he said.
"There is a huge number - particularly in the North Island - of different iwi and hapū groups that are going to be, in effect, centralised into one entity."
"The reality of all of these different iwi groups being put into one centralised entity model is going to mean that local voices are going to be diluted. And, you know, the reality is that some iwis' voices as part of this, they're going to be diluted as well."
But DIA said the entities would have more borrowing power than councils could achieve alone.
"It's growing the size of the pie in terms of the investment that can be made. So you know, there should be more investment into communities rather than than less. And so it's not a competitive zero sum game."
Watts said the smaller sub-regional groups - which would also maintain a 50-50 split between councils and mana whenua members - would not have enough power to affect decisions.
DIA insisted those more localised groups would be able to submit their views on prioritisation for service provision in their areas, and the entities would be required to listen.
"The water entities will need to develop infrastructure strategies, they'll need to develop asset management plans, funding and pricing plans, and there are explicit requirements on them to consult communities in developing those plans. The regional groups will help with that," Nick Davis said.
Watts said the main concern about co-governance was poor communication by the government.
"The concern primarily is that co-governance hasn't been defined clearly by this government and that's something that we would expect the government to do, to ensure that all Kiwis understand what they mean when they say that."
"National have been consistent that we believe that Māori have an interest in water, but we don't believe that anyone owns the water."
The minister - and the legislation - suggested ownership for Māori was not any part of it.
"The reform that we're putting through is not about ownership rights or interests in water, it's about service delivery, and infrastructure," Mahuta said.
"In fact this first bit of legislation going through the house has a preservation clause to make that quite clear."
Local Government New Zealand chief executive Susan Freeman-Greene said the issue had been "massively politicised".
"The model is better, significantly better than it was but ... I've been out and with our councils in the last week or two, and there's still a lack of understanding of how it works in practice, what the detail is.
"There are lots of places where there's misunderstanding and where even changes are being made or mooted or have been suggested aren't well understood."
She said some of the misinformation was becoming "pretty embedded".
Part of the problem was the government's much-maligned advertising campaign. Court said if anyone was to blame for misinformation, it was the government.
"If there's anyone who's politicised this issue it's the Minister, Nanaia Mahuta, and she should take responsibility for that."
Watts said Mahuta had been open about the fact the campaign could have been better.
"Well, that's probably an understatement," he said. "They've lost the trust of local communities and local council, this has not been an authentic consultation process."
Mahuta herself believed misinformation about co-governance, and the reforms generally, was coming from groups who simply did not want change.
"I think there are groups out there who don't want change, or they don't like the type of change that's being proposed. So they're promoting their interpretation of what they believe these changes are.
"There's a part of the council community and the wider community who just want things to stay the same. But if they stay the same, we can't guarantee every community will have access to clean, safe drinking water. And we can't guarantee that the cost required to upgrade infrastructure can be afforded by ratepayers. That's why we need to change."
LGNZ said it would be working on submissions as the Bill heads to its select committee process. DIA urged the public to also get involved.
"The department is running a social media platform. And what we're doing through that, as you know, like I said, providing factual base information about the reforms and what it's trying to achieve. We will have public notices encouraging the public to participate in the select committee process.
"We are really keen for people to participate in that select committee process."