Ryan Paterson-Rouse (left) with Save Happy Valley activist Graham Jury.

Ryan Paterson-Rouse (left) with Save Happy Valley activist Graham Jury.

Solid Energy's indirect hiring of a student to spy on a group protesting against it was unacceptable behaviour from a state-owned enterprise, Prime Minister Helen Clark said today.

"Clearly the company's frustration has boiled over to the point where it's been prepared to allow things to happen which simply aren't appropriate, and that should stop," she said.

Miss Clark said State-owned Enterprises Minister Trevor Mallard would be taking it up with Solid Energy this week.

"That behaviour is not acceptable from a state-owned enterprise," she said on TV One's Breakfast programme.

"But let's acknowledge that solid Energy has put up with some industrial sabotage, really, from a particular protest group."

The head of the company has rejected calls for his resignation, saying his firm will do whatever is necessary to protect itself.

Solid Energy chief executive Dr Don Elder has come out swinging against the "anarchist" Save Happy Valley Coalition, after it was revealed the student was paid to supply information to a private investigation firm contracted by the company.

The spy, Ryan Paterson-Rouse, admitted being paid $100 a week to provide inside information to Auckland's Thompson and Clark Investigations.

Mr Paterson-Rouse, 25, told the Herald he provided information about numbers at public meetings only because "I wasn't privy to much else".

He thought he was supplying the information to a journalist. He said he believed in what the protesters were doing, and saw the spying as a way to make some easy money. "I'm a poor student, mate."

Peace Action Wellington believes it was also infiltrated by a spy working for Thompson and Clark Investigations.

Save Happy Valley Coalition spokeswoman Frances Mountier said Dr Elder should resign immediately over the episode.

The Green Party has also called for heads to roll at Solid Energy if spying took place.

And the National Party wants a reassurance that taxpayers' money is not being spent on spying.

State Owned Enterprises Minister Trevor Mallard said he would be concerned if an SOE had indirectly hired someone to infiltrate a protest group, and he would discuss it with the company chairman.

Solid Energy would not acknowledge yesterday that a spy was used, but Dr Elder said the company would do whatever it deemed appropriate to protect the business. "None of this should come as any surprise. It's what businesses do."