New Zealand's domestic spying agency twice failed to tell the intelligence watchdog that it was undertaking visual surveillance, the Inspector General of Intelligence and Security says.

Green Party co-leader James Shaw said the Security Intelligence Service (SIS) had broken the law both times and its powers needed to be curbed.

Under controversial counter-terrorism law changes passed in December, the agency was given powers to undertake visual surveillance of private activity within private property if it suspected terrorist activities.

It was required to provide a copy of any visual surveillance warrant to the Inspector General of Intelligence and Security (IGIS) Cheryl Gwyn as soon as possible.


The IGIS released her annual report this afternoon.

It showed that since the law was passed in December, the SIS had twice applied for visual surveillance warrants.

The report said on both occasions the SIS did not initially provide a copy of the warrants to Ms Gwyn's office.

They were only identified later when the IGIS carried out its regular review of all of the SIS' warrants.

In response to the "incident", the annual report said, the SIS had changed its protocols to ensure the IGIS was provided with a warrant the day it was issued.

Mr Shaw said the Greens had opposed the extension of the SIS' powers when they were being passed into law because its spies had a history of breaking the law.

"And that is what has happened yet again," he said.

"The SIS was given extra powers of video surveillance which it has used twice, and both times have been found to have broken the law. At the very least, these new powers have to go."


Mr Shaw said the SIS needed proper oversight by a democratically elected Parliamentary select committee.

The law changes also allowed the SIS to undertake surveillance without a warrant in special, urgent cases, for up to 24 hours.

This power had not yet been used by the agency, the annual report showed.

Minister for the SIS Chris Finlayson said the SIS was "a human organisation" and there were "always going to be mistakes".

The SIS was improving its compliance overall but "they still have a way to go".

Mr Finlayson said he had spoken to the agency "in no uncertain terms" about the "slip-up".

The minister said the IGIS' findings also showed that the spying watchdog was not toothless - contrary to claims from Opposition MPs who said the agency lacked oversight.

Ms Gwyn also revealed in the annual report that she had begun an inquiry into whether New Zealand's intelligence agencies had any connection to the Central Intelligence Agency (CIA) detention and interrogation programme.

The US Senate Committee last year published findings on torture and inhumane treatment by the CIA between 2001 and 2009.

The report identified other countries which were involved in the CIA programme but these were redacted in the report.

Ms Gwyn said there was a public interest in investigating whether New Zealand spies knew of, or were connected to the activities uncovered in the US Senate Committee report. She said her initiation of an inquiry did not presuppose New Zealand involvement in the interrogation activities.

Mr Finlayson was asked this afternoon whether he knew of any New Zealand connection to the CIA's programme.

He did not respond to the question, saying that he would wait for the outcome of Ms Gwyn's inquiry.

SIS director Rebecca Kitteridge said she was disappointed the agency did not provide a copy of the warrants "as soon as practicable".

"As the IGIS report notes, we now have an agreed process for managing this notification," she said.