Newshub can reveal mayors are lawyering up over a "surprise" clause in their Three Waters cash contract banning them from criticising the reforms.
The Opposition is calling it a gag order but the Government says it's no such thing.
Three Waters is the Government's controversial reforms to fix New Zealand's ageing pipes and clean up our dirty water. But councils say the Government has done the dirty on them over the deal.
"The money that we're talking about is just peanuts compared to the total value of communities' assets in Three Waters infrastructure," Mayor of Manawatū District Helen Worboys told Newshub.
The Government is starting to splash the Three Waters cash. Applications open to councils this week for the first $500 million slice of the $2 billion funding pie. It's called the 'better off' package.
"It's to support local government to look towards other areas of obligations to fund because they've been constrained by their balance sheet," Local Government Minister Nanaia Mahuta said.
The agreement has Worboys - who heads a group of 32 mayors opposing the reforms - lawyering up.
"Of course the first thing we're doing is getting some legal advice around it," she said.
A part of the deal has been slammed as a gag order. It states that councils who get the cash "must not at any time do anything which could have an adverse effect on the reputation, good standing or goodwill of the Department of Internal Affairs or the Government".
Worboys has questions about it.
"Does that extend to our council that can no longer push back against opposing the reform model? There's those kinds of implications there."
National leader Christopher Luxon suggested the clause was problematic.
"If you do take the money then you sure as can't criticise the Government, it does feel like a gag order."
In a statement, the Department of Internal Affairs told Newshub "no clause in the Funding Agreement... prevents or prohibits any council from publicly expressing its own views".
It adds: "It is a common and prudent clause in public funding documents as a safeguard to protect against the misuse of public funds."
Mahuta is promising this is no gag order.
"I think you only need to look at how the debate's transpired over the past four years to see this has been a very active debate."
This mess has been described to Newshub by an official as "a bit of untidiness" because there was meant to be an assurance about the clause in a letter that went to mayors. For whatever reason, that disappeared.
But when you're telling councils to hand over their water assets, everything should be watertight.
