Prime Minister John Key is defending the $26 million cost of the two referendums and other costs around the flag change process confirmed earlier today.

He and his Deputy Bill English, who will be responsible for the two year process, said a group of "respected New Zealanders" would be chosen to sit on a Flag Consideration Panel, which would seek submissions from the public on new flag designs and suggestions.

The leading alternate designs would be put to a referendum late next year to choose a preferred design, while a second referendum to be held in 2016 would be a run-off between the preferred new design and the existing flag.

Along with and advertising blitz around the three or four new designs, which would begin on Anzac Day next year, the referendums and other costs of the process would come to $25.7 million.


Mr Key faced questions in Parliament this afternoon about that expenditure at a time when, as Unicef noted in a report today, child poverty levels in this country were not improving.

However, Mr Key earlier told reporters that "if we are to embark on a serious process where we engage with New Zealanders I don't think that's possible without holding potentially two referendums".

"In the end you have to say, what price do you put on democracy where people can genuinely have their say on a matter that is actually important? ... This is a cost essentially of one of the values that New Zealanders would want to test.

"Yes, it's a one-off cost, but my view would be that if the flag doesn't change as a result of this referendum process, then it won't be changing for a good 50 to 100 years, so this is a cost we have to bear."

Mr English said he had now written to party leaders asking them to nominate an MP for a cross-party group which would nominate the members of the Flag Consideration Panel and then later review the necessary legislation for the referendums, which would be binding on the Government.