A "domestic beheading" inspired by foreign fanatics is one of several threats New Zealand potentially faces from the so-called Islamic State, John Key said this morning.

Mr Key told The Nation a disproportionate number of Islamic State (IS) fighters were sourced from in and around Oceania. He said it was possible this would increase the likelihood of another "Bali bombing" terrorist act.

Any New Zealand commitment of military assistance to counter Islamic State militants in Iraq should not make New Zealand more of a target for terrorism, Prime Minister John Key says.

The Prime Minister said IS terrorists returning to New Zealand were another possible security risk. He said IS also posed a major risk to Kiwi aid workers and other expatriates based in the Middle East.

He told TV3 these reasons, together with the "frightening" growth of IS were among the reasons New Zealand might join combat operations against the rogue state.


Mr Key said "it would be very odd for New Zealand" to do nothing when its allies and international partners were involved in fighting back against the IS.

"The question is what we do, rather than whether we do something," he said.

Earlier this week Mr Key said that if New Zealand did commit SAS forces or other ground forces - something he would not rule out - he did not believe that would create new dangers for this country.

"Generally the advice I've seen is that it's not likely to significantly change the risk profile", he told reporters after his new executive was sworn in at Government House today.

The risks would be "no greater than I think the risks are currently here today".

However he indicated that any potential for increased risk would not deter him from deciding to commit military forces.

"If you weren't prepared to do anything solely on the basis of that (increased risk) then you actually start losing your independent foreign policy because by definition you're saying that the actions of terrorists will stop you standing up to those terrorists and I think that's a dilution of responsibility that New Zealanders wouldn't want to take."

Any actions New Zealand might or might not take would be considered carefully and cautiously, "but I don't think (Islamic State) should be determining the strategies and policies that New Zealand took".

- with additional reporting by Adam Bennett, NZ Herald