A new flag had to be unifying, Mr Hall said, and servicemen and women should not feel like their past efforts had consigned to the scrapheap.
"They want to throw our history away and call it a brand ... If it doesn't unite people, it's a fail."
The outspoken artist believed the design likely to win the day was the Prime Minister's favourite, a red, white and blue design featuring a fern and the Southern Cross.
Mr Hall said the problem with that design was that it failed to reference either of the two Treaty partners.
A new flag needed historical context, including reference to New Zealand's British heritage, and a flag without a Maori element made no sense.
Aotearoa was the only land Maori had and Maori culture, such as the greeting 'kia ora' and the haka, identified all New Zealanders when they were overseas.
A new flag could bring people together and celebrate a moment in history, such as reconciliation between Maori and Pakeha when historical Treaty claims were settled.
"We could make it exciting, powerful and palatable. Instead it's an opportunity lost."
Mr Hall's own designs, intended as a conversation-starters, combine three existing flags in one - the New Zealand flag, the tino rangatiratanga flag, and the United Tribes flag from 1835.
Read more about Mr Hall's designs at http://lesterhall.com/flag or the Flag Consideration Project at http://flag.govt.nz.