New Zealand First is behind local authorities who are challenging the Local Government Amendment Bill (No2), the party leaders said in Dannevirke last week.
The bill was introduced to Parliament last month and, if passed, will enable the Local Government Commission to create Council Controlled Organisations (CCOs) without consultation and without the agreement of councils or the community.
"The Local Government Commission is setting out to screw local bodies," NZ First leader Winston Peters said.
"They want to amalgamate you, but look at Auckland. It's a total, absolute mess.
"If you want that, you should be able to vote for it."
Deputy leader Ron Mark said NZ First stood firmly behind residents and ratepayers on the issue.
"We understand the situation of this bill and, when we are in government, we will change the legislation."
The Tararua District Council is strongly opposed to many aspects of the bill and has put in a submission against it.
However, Wairarapa MP, National's Alastair Scott, has told the Dannevirke News CCOs exist in Auckland and huge savings had been made on water and transport with ratepayers across the greater Auckland region receiving better services.
"Options for CCOs are diverse, they don't necessarily have to follow the Auckland model. They could manage services without owning assets - like Wellington Water - or be a trust," he said.
"Communities have rejected large-scale amalgamations as they want keep their local voice and democracy. The Government has heard this message. The focus of the reforms is to provide a wider menu of options for councils to collaborate in the delivery of local services.
"Councils have expressed concerns around the proposal to allow the Local Government Commission to establish CCOs without necessarily having the agreement of all affected councils and without recourse to a poll, but CCOs will not be forced on communities without public consultation.
"This was an important point made in the Tararua District Council's submission."
Mr Scott said the Local Government Commission would be subject to greater oversight and bound by statutory criteria.
"In any investigation, it will be required to consult with key stakeholders, including affected councils and local communities."