The Government has acknowledged international criticism of its new law around online state surveillance but internet giant Google says it has failed to address those concerns.
The Telecommunications (Interception Capability and Security) Bill has been reported back to Parliament by the commerce committee.
The bill sets out how telecommunications and internet service provider companies must allow spy agencies the Government Communications Security Bureau (GCSB), Security Intelligence Service, police and others to monitor communications over their networks and services.
It has come under fire from international internet companies Google and Microsoft, which warned that it results in orders to intercept communications that conflicted with US and other countries' laws.
Kim Dotcom's Mega argued the law could require companies like Mega to decode users' encrypted information when that was physically impossible given the encryption systems used.
In its report the committee appeared to respond to that criticism. It said the bill's "duty to assist" obligations required a service provider to take all "reasonable steps" to help New Zealand spy agencies who had obtained a relevant warrant but "acting in conflict with another jurisdiction's law would not be considered reasonable".
The committee also said the legislation would not require service providers to decode data beyond "reasonable steps" to do so.
A Google spokesman yesterday told the Herald its concerns had not been assuaged by the committee's commentary. "We don't think the current bill strikes the right balance between the legitimate interests of law enforcement and the privacy and security of our users."
Meanwhile, Labour leader David Cunliffe was among speakers at a meeting last night in Wellington opposing the bill, as were Mega chief executive Vikram Kumar, Greens co-leader Russel Norman and Mana's John Minto.
About 100 people attended the meeting at Old St Paul's church.