He said the bill needed to be carefully considered and that if it was replicated in other councils, it could have significant impacts which "may be better considered in full by central government".
This view has been backed up by other legal experts including lawyer Graeme Edgeler, who in his written submission said the bill was "at best unnecessary, and at worst, profoundly contrary to established democratic principles".
National Party justice spokesman Paul Goldsmith said the Government needed to be clear about its views on the bill, after initially voting for it.
The bill would give the roughly 22,000 Māori roll voters in Rotorua three council seats - the same number as the 56,000 voters on the general roll.
"Each Māori roll vote would effectively be worth roughly two-and-a-half votes on the general roll," Goldsmith said.
"That Bill, if passed, would change the nature of our democracy from one that is grounded on equal suffrage to one that is based on something else."
Māori Development Minister Willie Jackson told RNZ the Government was "obliged" to support it at first reading and get it to the select committee process where it could be improved.
The Attorney-General had found "some technical problems", and now the Government was committed to not only "get it right" but have the public on board, he said.
"We've got to get this right going forward, so if it's back to square one, it's back to square one.
"That doesn't mean it's the end of it, it means there's got to be a bit of work in terms of drafting it."
Attorney-General David Parker said the issues raised in his report were now before the select committee and there would be further advice provided before it went back to Parliament for a further reading.
Parker said he believed it was possible to improve Māori representation at local government level without breaching the Bill of Rights Act.
Māori constitutional law expert Dr Carwyn Jones said it was interesting to note the Bill of Rights report acknowledged Māori participation and representation at local government level was a "significant issue" and that some level of discrimination could potentially be justified.
The bill runs alongside another to reinstate direct Ngāi Tahu representation on the Canterbury Regional Council, taking an iwi-focused approach.
Jones said clearly Rotorua had decided a wards-based approach was the best option, and it had support of local iwi.
"There might be places where it makes sense to have a direct link to mana whenua and others where it is Māori as a whole."
Rather than focus on the idea of co-governance and dividing up numbers, the most important aspects were relationships involved and ensuring there were structures to encourage participation, Jones said.
Amendments brought in last year to the Local Electoral Act 2001 meant councils could bring in Māori wards for the 2022 elections without the decision going to a public poll (more enduring legislation is anticipated to be in place for the 2025 elections and beyond).
Rotorua previously elected its mayor and 10 councillors at-large (meaning across the whole population rather than divided into smaller wards).
It agreed to create a Māori ward but found its preferred arrangement - three each of Māori and general ward seats plus four seats and a mayor elected at-large, and two community boards - was not allowed under the Local Electoral Act 2001.
The act required the number of Māori seats to be proportional to the population.
The council pursued the local bill to legalise its preferred arrangement for the next two council elections.
The bill passed its first reading on April 6 and is now before the Māori Affairs Committee.
Rotorua Lakes Council mayor Steve Chadwick said in her oral submission the bill had been a complicated journey that had not been rushed.
"Rotorua is unique, what suits us does not necessarily suit the rest of New Zealand."
She said there was a large and growing Māori population in the city and the community faced significant issues that could not be overcome without the bill.
She said without this model, the Māori voice was diminished.
"No other ethnicity is marginalised in this way."
She told RNZ she believed they could work through issues raised by the Attorney-General's report.
