Former Detective Senior Sergeant John Marsden, who led the investigation, said 23 years of imprisonment was not too long for someone with Dally's offending.
"I've been out of touch of course for many years and I don't know what sort of rehabilitation he's been through," Mr Marsden told Radio New Zealand.
"But for anyone to have committed the crime under the circumstances he did ... I don't believe he's in the right state to come out this time.
"I don't believe he's fit enough to come out.
"Anyone who commits a horrendous crime like he has done, I don't believe he should ever see the light of day."
Karla's stepfather Mark Middleton told 3 News he believed Dally was as dangerous as ever.
"For those people who think he's done his time and should be let out, perhaps invite him to their family, their daughters, bounce their kids up and down on his knee and see what they think," he said.
Mr Middleton was convicted in 1999 for threatening to kill Dally if he was freed from prison.
Mr Middleton told 3 News yesterday: "I have no fears of Paul Dally, and I've always said I want him released from prison."
Dally's last parole attempt in 2010 was refused.