"I am reluctant to mention your hereditary forebears but your nation has a long history of ignoring the norms of what we now call 'decent society' it seems that you follow in their footsteps," Machen stated.
Schulte "escaped" East Germany in 1980.
Machen started the email by stating Schulte was the most stupid and ignorant person he knew.
"In 50 years of being involved in local affairs and politics you are the most stupid and ignorant person I have ever encountered. Your superior attitude and ignorance of due process and natural justice is revealing of this ignorance."
Following an email from another councillor persuading Machen to apologise for the reference to Schulte's country of origin, the deputy mayor went further.
"It is my opinion, based on the foregoing that there is a trait amongst some people of Germanic origin of a certain arrogance and in fact ignorance of what I call polite behaviour."
Machen told RNZ he did not believe the statements were racist and has since apologised for his words.
"He has made remarks which I have found insulting to the process, so I sent him an email which mainly concentrates on his behaviour but it finally ends up with me bringing up his hereditary status.
"I am not in this world to demean anybody but I do abhor bad behaviour."
Machen said on reflection, he would not have included the line highlighting Schulte's German heritage.
"But in saying that, what's done is done, I have apologised.
"Sometimes when we get a little bit angry with people who are not being sensible we sometimes can say the wrong thing, and you can regret causing hurt. And I do regret that."
Machen said his apology was sincere and came long before the Human Rights Commission was involved.
Schulte disagrees and said racism had no place in a multicultural society, let alone on council.
"I took it personally. I couldn't sleep for a week, I was off my food.
"When somebody tells you things like that, and you are responsible for the death of millions and he is the deputy mayor, that is very very sad. Especially in our multicultural district we've got here."
Machen said he was not associating Schulte with the devastation of Nazi Germany.
However, Schulte said he had never encountered an incident like this since leaving Germany 41 years ago.
Schulte has called for Machen to resign as deputy mayor.
The Human Rights Commission would not comment before its investigation is complete.
- RNZ
