National Party leader Judith Collins is standing by her claim that the Government wants Ngāi Tahu to co-own water infrastructure - despite being told she is wrong by the South Island iwi, mayors and Government ministers.
It has prompted a second rebuke from Ngāi Tahu.
"The only person proposing a co-ownership model is Judith Collins," said Te Maire Tau, chair of Te Kura Taka Pini (the Ngāi Tahu freshwater group).
Collins made her claim during a weekend speech to the party's South Island conference in Queenstown, where she also released a document titled Joint Governance Group - Ngāi Tahu Takiwa.
She said the Government's Three Water reforms would create a handful of regional water entities, and the one covering the South Island would be 50/50 co-owned by Ngāi Tahu and the 23 councils in the area.
"This means councils that have invested in pipes, wastewater and drinking water facilities would see their assets gone," Collins said on Sunday.
Her claim was quickly rubbished by Ngāi Tahu, who said discussions have been around co-governance, not co-ownership, and that Collins was being "deceptive and wrong".
The sentiment has been echoed by Prime Minister Jacinda Ardern and Local Government Minister Nanaia Mahuta.
Dunedin mayor Aaron Hawkins also accused Collins of an "increasingly desperate dog-whistle strategy" that was creating "fear and division".
Clutha mayor Bryan Cadogan, who is chairman of a group representing Otago and Southland's 10 city, district and regional councils in discussing the reforms, said it was "imperative we stick to the facts".
This morning Collins stood by her claim and the document she released.
She said that Ngāi Tahu's response showed that the iwi didn't want co-ownership, but the Government did and had now backed down.
"I am very happy to say that the document that I put out in the weekend was the document given to the [Three Waters] hui. And it has now been changed by the Government so they've obviously stepped back.
"I thought it was very telling that Ngāi Tahu said they did not ask for co-ownership of all the water. But that was clearly what the Government was offering."
She said "those who are very close to Ngāi Tahi" had told her that the Government wanted co-ownership but the iwi had pushed back.
"Ngāi Tahu is far more connected to the feelings of most New Zealanders than the Government is."
Collins also stood by the document she released, saying it was an official Department of Internal Affairs document that South Island mayors had given her.
Ngāi Tahu has said the document was created by independent consultants and was "not pursued by Ngāi Tahu".
Collins said it was a Government document because "it's got Department of Internal Affairs (DIA) on it".
"It's very clear we've also had discussions with some chief executives and other mayors. They absolutely stand by that document."
Collins also rubbished the latest poll that had her preferred PM numbers drop to 5.6 per cent, and said her MPs backed her attempts to paint the Government as having a "separatist by stealth" agenda.
Waimakariri MP Matt Doocey said Collins was asking "the right questions".
"The point here is that DIA took that [co-ownership] as an option to the mayors. Whether they're pursuing that or not, the question is whether that should be taken as an option.
"I think Labour's agenda is very concerning."
Pakuranga MP Simeon Brown agreed, and said that asking questions didn't risk validating racist views.
MP Chris Bishop said Collins was "absolutely doing the right thing" and she was being "very careful" with her language.
Tauranga MP Simon Bridges said Collins was "asking fair questions".
"I don't think they're divisive. I think they're fair."
Meanwhile Collins wouldn't be drawn on what she would think if the Budget included specific funding for Māori housing.
"One of the things that the Government needs to do is to look at people's needs ... In terms of making it easier based on ethnicity, that's not the issue. The issue is - does someone need a house?"