The witness said Heenan demonstrated on him how he had killed Mr Newton, by coming up from behind, reaching underneath Mr Newton's right arm and stabbing him through the heart. Heenan said he'd gone "straight for the kill shot", the witness said.
He said Heenan then took him inside the house and showed him where it happened, pointing out a blood stain on the carpet.
"He said that Raukawa was calling up Maori gods ... [Heenan] is a superstitious man, he always has been."
The witness said Heenan told him he went into the toilet and with two hands "pushed" a knife or screwdriver into his own stomach to make it look like someone else had stabbed them.
The witness said Heenan seemed happy that he'd stabbed Mr Newton.
During cross-examination defence lawyer Simon Lance asked the witness why he didn't tell police about the conversation straight away.
"Safety was my main issue," the witness replied.
He said he told police in 2009 after Heenan had been charged and was "securely locked away".
Mr Lance also questioned the witness about how much he had drunk the day of the conversation and whether he had previously seen newspaper articles about Mr Newton's death.
He will continue cross-examination of the witness today and the defence will open its case next week.