"So, yes there are some potential threats but they're at a much lower level from what we see, for instance, in Australia."
Asked whether the Security Intelligence Service (SIS) and Government Communications and Security Bureau (GCSB) was attempting to justify its existence, Mr Key said it was simply fulfilling its legal requirement to brief a new minister.
"The agency has a responsibility to tell the Government what it should consider," he told reporters.
Mr Key reiterated that the SIS had a watch-list of 35 to 40 people that it was monitoring closely. This number had not changed since the watch-list was first revealed nearly a year ago.
The Prime Minister also defended the SIS following a critical report by the Inspector General of Intelligence and Security (IGIS) Cheryl Gwyn, released yesterday.
"I think Cheryl Gwyn ... would say there's a lot of progress that's been made at SIS but there's still more work to be done."
The SIS twice abused new surveillance powers in the last six months by failing to notify the IGIS, as required by law. The two visual surveillance warrants were only picked up when the IGIS carried out a regular review.
The briefing document concern about "violent extremism" appeared linked to concerns over the ability of the extremist group Isis (Islamic State) to export terror and was linked to observations "significant migration" was "creating communities [in New Zealand] with distinct identities and links to overseas".
The report also warned of "hostile intelligence operations" on NZ soil, organised crime and vulnerability to cyber attacks. And there was concern at "mass arrivals", although the small section following was deleted, and "instability in the South Pacific". The ministers were told: "The threats facing New Zealand are real and are undoubtedly growing (not least the risks of onshore violent extremism and cyber security). Some of these threats we have never seen before."
The briefing document also told ministers the intelligence community worked to "help keep Kiwis safe" which it did by "identifying terrorist threats at home and abroad", fighting "cyber espionage" and working with law enforcement agencies or the Defence Force.
The intelligence community was also focused on "protecting and growing the economy" through security screening, and protecting state buildings and information both physically and in the cyber world. "If we don't look after our information properly it will be taken by other countries or criminal groups. We know this because they try to do it now."
In the section on how NZ responds to the threats, the document redacts areas amid references to flaws identified in some reports into the agencies which make up the intelligence community. The spies also said there was "financial pressure" because of the focus on "organisational improvement and the need to upgrade our capabilities".
The document also raised the prospect of law changes. It said "the NZSIS Act is in dire need of updating and modernisation".
The briefing pointed to the current review into the spy agencies, a legacy of the controversial changes in 2013 which saw United Future's Peter Dunne back the Government if the agencies were subject to a review every five years. The document said any new legislation suggested out of the review could be put before Parliament in 2016.
It also underscored the importance and cost-saving to NZ of the Five Eyes partnership with the US, Britain, Canada and Australia.
SIS minister Christopher Finlayson said the NZSIS Act was enacted in 1969 and needed a review because of its age. He said regular reviews helped ensure the legislative framework kept up with changing risks to national security, while protecting individual rights and maintaining public confidence in the agencies.
Green Party co-leader James Shaw said the spies' briefing for ministers contained very little detail and provided no evidence of violent extremism.
"Every Government agency tends to talk up their piece of work in the briefings to incoming ministers. Spy agencies need to justify their existence. So I would want to see some evidence for what they're claiming."
He reiterated the Greens' call for greater Parliamentary oversight of spying agencies in the form of a select committee.
Mr Finlayson said yesterday said there was no need for greater oversight. He said the spying watchdog, Inspector General of Intelligence and Security (IGIS) Cheryl Gwyn, had shown she was not toothless. She had held the SIS to account and was increasingly initiating her own inquiries.
Mr Shaw said the IGIS was the equivalent of an ambulance at the bottom of the cliff.
"Imagine if we had a general inspectorate for health, who kept reporting over and over that our health agencies were disastrous and kept killing people by accident, but we didn't do anything about it.
"It's good that [the IGIS] is shedding light on what's going on. But it doesn't equate to proper oversight."
6 Threats to NZ
1 Violent extremism in NZ and by New Zealanders - the report warns migration is creating communities with "distinct identities and links overseas". It appears to reflect information the SIS has learned from Muslim communities.
2 Loss of information and data - the means by which a cyber attack is done is "easier to acquire and easy to combine with insider threats". It poses economic and reputational risks.
3 Hostile intelligence operations in and against the country - the report warns of "industrial espionage" against companies and "targeting of New Zealanders by foreign governments". Again, the consequence of increased migration could be linked to these concerns.
4 Mass arrivals - the entire small section is redacted, but John Key has previously spoken of concern over boat-loads of refugees making landfall in New Zealand.
5 Trans-national organised crime - drugs, money-laundering and illegal fishing are highlighted, brought about by an "open economy, the internet and established networks among migrant communities".
6 Instability in the South Pacific - the entire section is blanked out, but the SIS has had a close focus on Fiji, its leadership and anti-regime movements in New Zealand and Australia.
Source: Briefing to the Incoming Minister, NZ Intelligence Community.
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- Additional reporting from Isaac Davison
