Treasury official lost sensitive notebook

A Treasury official's lost notebook, which revealed the Government was thinking about merging intelligence agencies, could also contain secrets concerning the Corrections Department and the police, Prime Minister John Key said today.

A review of the way the Security Intelligence Service, the External Assessments Bureau and the Government Communications Security Bureau worked was revealed in a notebook found by a Radio New Zealand reporter.

Mr Key said the loss was a "less than ideal situation", but it was a fact of life that people made mistakes.

"While we regret it, I wouldn't want to see the person lose their job as a result of the incident," he said.

Mr Key said he understood the Treasury official also covered Corrections and the police, so there could have been information on those areas in the notebook as well.

He confirmed former foreign affairs secretary Simon Murdoch had been asked to review the services.

"It is very early days. I just simply asked them to look at that as part of the value for money exercise and the future requirements and capabilities of those services.

"I wouldn't read anything into it because we are a long way away from seriously contemplating a merger, but I thought it was a good idea for Simon Murdoch to conduct a review and he is doing that."

The GCSB is involved in international electronic surveillance and Mr Key said any concerns that surveillance might be turned more on New Zealanders would be addressed if a merger was seriously considered.

The SIS and the GCSB both had their budgets cut by about 5 percent in the last budget, he said.

"They were comfortable they could cope with that. . . I drove the decision to have the look (at how they operate) because there is quite a bit of crossover."

Green MP Keith Locke said he would be concerned if there was a merger.

"One of the problems is the GCSB's main operation at Waihopai (in Marlborough) is essentially part of the Americans' National Security Agency," Mr Locke said.

"To link up the SIS with the GCSB would risk intelligence services coming more under the control of the American intelligence services which is certainly the case with the GCSB."

He did not believe a merger was likely because internationally similar agencies were kept separate.

Treasury secretary John Whitehead said he had apologised to Mr Key about the incident and it was being followed up internally.