If passed, the law would result in an arrest, a fine of up to $2000 and the destruction of the insignia.
"Members of our community have told me they feel intimidated by gang members. This bill is modelled on the Wanganui District Council [Prohibition of Gang Insignia] Act 2009. This bill is about putting the rights of the law- abiding members of our country before those who seek to profit from the harm they cause.''
Mr McClay expected the bill would be debated in Parliament within the next two months. He said there was a lot of support for his bill but he planned to speak to all of the party leaders and new MPs over the next five weeks.
He said gang members would not be banned from visiting government departments or schools but would be required to leave their gang patches at home.
Sensible Sentencing Trust Rotorua spokesman Peter Bentley supported Mr McClay's bill.
Mr Bentley said it was sad it had come to this, but gang members wore patches to intimidate others and that was not something Rotorua or the rest of the country needed.
"These people value their patch more than their children. We all appreciate that they are organisations totally dedicated to illegal activity so anything we can do to control or restrict their freedom of movement is a good thing.''
Labour List MP Sue Moroneysaid while Mr McClay's bill had good intentions it was not addressing the real issues that kept gangs alive, which was high youth unemployment which led young people with no purpose or opportunities to join gangs.
She said youth unemployment had trebled under the National Government. Ms Moroney said the Labour party would decide whether it would support the bill either at its next caucus meeting in a fortnight or closer to the time the bill would be debated in parliament.
New Zealand Secondary School Principals Association president and John Paul College principal Patrick Walsh thought the ban on gang insignia was an excellent idea.
Mr Walsh said they had two gang members wearing gang patches from out of town arrive at a sporting fixture, which created an atmosphere of fear and intimidation.
Schools did not have any power to ban gang insignia other than via issuing a trespass notice.