"You have people like the Taxpayers Union making it a very easy forum for people to engage in and tell their councillors and mayors they should not be in this space. There's been an enormous flood of emails going to elected members saying 'please don't do this'.
"Some of that is potentially ill-informed but there are real concerns out there and they mirror the concerns of council."
The Government's two-month engagement period allowing councils to assess the impact of the proposed reforms on their communities ended on Friday.
Whanganui mayor Hamish McDouall said his council wants clarity and "clear, accessible public information" so it can formally consult with its community.
In Ruapehu, mayor Don Cameron said his council was working to fully understand the proposed changes before advising and consulting with the community with more complete information at hand.
Rangitīkei District Council – which has already gone out to seek community views – said there was a lack of public and mana whenua understanding about the need for change and the proposed reforms. In a letter to Local Government Minister Nanaia Mahuta, it said communities were expressing concern about the lack of engagement, and a perceived loss of assets and local control.
"Most of our population have very little understanding and there's been some sensationalism around some aspects of the proposed legislation," Watson said.
"Iwi have been poorly consulted with. There's been a feeling from Government that councils could go to their iwi engagement processes, give them all of the information, and the decision would just come back."
But Watson said iwi and the wider community alike need clear information to understand the proposed changes.
The council was seeking "absolute clarity" on the governance model and structure, the ability of small communities to inform decisions, how rural water schemes will be captured, the scale of investment needed and the Government's modelling around what savings will be achieved.
"There's been a lot of doubt cast around that modelling. Local Government New Zealand has peer-reviewed it and the reviews have come back largely saying there are efficiencies that could be gained and potentially cash savings," Watson said.
"The difficulty is what do you lose? You lose, to some extent, absolutely local voice, prioritisation, and literally the governance of what the ratepayers have funded for a long time."
With more councils around the country now sceptical, he thinks the model will fall over unless the reforms become mandatory.
Rangitīkei District Council has asked the Minister to analyse and consider alternative models.
Watson said he sees advantages in some form of aggregation.
"If the current entity model wasn't to survive you'd probably find a number of councils saying let's look at this regionally, are there options for us to work more closely together? Bearing in mind, for instance, we have some shared services with Manawatū.
"All the councils say we need to up our game and put significant investment back into the three waters. Rangitīkei council has invested heavily within our long-term plan in the first three years to continue to address these issues, to make sure we are compliant in the future, that the compliance issues we have are solved, and the standard of supply is improved. Those are a given as something that needs to happen."
Mahuta said she has had more than 150 engagements on the proposed reforms with councils, iwi, the water industry and other stakeholders. She expects a final report in the coming weeks, including any advice on changing aspects of the proposals.
Cabinet will then consider the next steps, including a process for public consultation, Mahuta said.
