It started just like any other day in a small rural District Court.

"They talked about some guy whose dog was not registered, then some guy caught driving for the 28th time without a licence," says a "tracker" who was in court that day with a teenager who was charged with having oral sex with a boy five years younger.

"Then the judge read out [the youth's] supposed offending ... and the court filled up to overflowing. It was unreal," the tracker recalls.

"There was one man, a Pakeha, about 45, well-dressed, suit and tie, who was literally writing notes and handing them out and people were running off. It was almost like he was some sort of king of the vigilantes.

"There was a glass window between the registrar's office and the court. I was with [the youth] inside, and they were coming up to the glass and thumping it: 'If we see you on the streets we'll f***ing get you!"'

The incident dramatises the risks in New Zealand's current policy of treating almost all adolescent sex offenders in the community, rather than following the American example of jailing them.

Parliament's social services select committee launched an inquiry into how we handle youth sex offenders a year ago this month. But it has found no easy answers for its report, which is due before the election.

"It's a real conundrum," says National's spokeswoman on Child, Youth and Family Services (CYFS) and education, Anne Tolley, who pushed for the inquiry.

"We have some severely troubled kids out there who need total one-on-one care, but they also need to be brought into society. That can only be done with the knowledge of the community."

Everyone hates child molesters. Ironically, they bring out the worst in us because they strike at our noblest instinct, our love for our children.

Adults who commit sex crimes are almost invariably jailed. But children under 14 cannot be charged with any criminal offence except murder or manslaughter, and the law provides that young people aged 14 to 16 who commit offences "should be kept in the community so far as that is practicable and consonant with the need to ensure the safety of the public".

Garth McVicar of the Sensible Sentencing Trust says the policy is wrong. He wants the worst young sex offenders locked in preventive detention in their teens - before they get a chance to commit a crime as an adult.

"It seems to be dumb that we have to wait until there's another victim before that can be done," he says.

National MP Chris Tremain said last year that sometimes serious young sex offenders "need to be institutionalised".

But a few days later, after his office was "besieged" by callers with rumours of an offender's whereabouts, Tremain had to urge people not to take the law into their own hands.