S.147 is being voted on today. This would create a separate mini-government in Hawaii, based on a person's nativeness. It'd be similar to the Native Americans, and this is the reasoning behind the bill. I don't understand how native Hawaiians need to be helped out in any way, since they weren't forced off their land and while yes some injustices did occur, they WANTED to join the U.S. There's no reason why, in this supposedly equal world, why you should be able to do something based purely on race. They aren't inherently disadvantaged or anything. It's not like we need to "make up" for things that may have happened over half a century ago.

Is it a separate state government or an entirely new one? What kind of powers will it have? I don't really understand what this is all about but it does not sound right on the face of it.

It's a seperate state government, similar to what the Native Americans have, but more integrated, even though the government will consist entirely of natives. I'd look it up it's hard to really explain concisely.