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Councillors will decide at a meeting in Dunedin tomorrow whether to ask Ngai Tahu to appoint two representatives to its policy committee.
They will have voting and speaking rights and join 12 elected councillors at the table.
Cr Michael Laws has blasted the move as an "assault upon democracy''.
"It is so privileged, and so obviously racist, that it calls into question the fundamental principles of democracy in Otago.''
The decision would empower an "unelected minority''.
"It is a recommendation that embraces all the PC nonsense of our age but misrepresents both logic and law in advancing such racial privilege.''
Cr Bryan Scott said the principle of having iwi at the table was "exciting''.
"My personal view is we always need to strive to do better with iwi and this is a way of doing that.''
They would represent two seats out of 14 and all decisions would have to be ratified by the full council, he said.
"Ideally, they can add value and we can discuss things face to face. The outcomes will be better for our community.''
Cr Sam Neill was unsure how he would vote.
He was not sure representation on the committee was the best way to have iwi input in decisions.
There were previously iwi representatives on the council's technical committee, but it "didn't work very well'' as they could not gauge what happened in other committees, he said.
He would rather see representatives of Maori, and also wider Otago, on the full council and had approached such people to run for office, he said.
Chairman Stephen Woodhead said the council had an opportunity to enhance its relationship with runanga in a meaningful way.
It would reflect past practice and also the council's statutory responsibilities to consult with iwi in planning policy.
Otakou kaumatua Edward Ellison said the runaka asked council for a seat on the committee, given the particular stage the council was at with important water plan changes.
Cr Laws did not understand the statutory responsibility of council partnerships with iwi, he said.
"These councils have to have a stronger relationship with tangata whenua.''