Mr McClay, a National MP, wanted local authorities to be allowed to decide whether shops in their area opened on Easter Sunday.
"Rotorua continues to be the pre-eminent tourist and visitor destination in New Zealand," he said.
"Easter weekend is one of our busiest weekends, we have many, many thousand domestic and international visitors who come to see us at this time."
Mr McClay said Easter trading laws were a mess – Taupo could open on Easter Sunday but Rotorua, 80km away, could not. Queenstown could open, but Wanaka could not.
"My bill won't compel shops to open in Rotorua or anywhere else," Mr McClay said.
"It won't compel workers anywhere to work on Easter Sunday if they don't want to.
"In Rotorua we don't want to tell people in other parts of the country what to do, that's a choice for them."
Most Labour MPs who spoke during the debate opposed the bill, saying workers wouldn't have a choice and Easter Sunday was a day for families.
"My conscience doesn't allow me to vote for this bill," said Rajen Prasad.
"I won't vote to jeopardise the interests of families and Easter Sunday is the only little bit left."
He said the bill didn't just affect Rotorua, it threw open the possibility of shops opening on Easter Sunday all over the country.
Labour's former Rotorua MP Steve Chadwick, who was defeated by Mr McClay in last year's election, said she supported the bill.
Ms Chadwick made an attempt to relax Easter trading laws during the last Parliament, and failed.
She said the Government should bring in a bill, because that was the only way the law was going to be changed.
Green Party MP David Clendon said the bill didn't require councils to consult their communities.
"To suggest workers would have a choice is naive," he said.
"They'd be told `turn up on Sunday or don't come back at all'."
The National Distribution Union staged a demonstration outside Parliament today in protest against the bill.
The union said retail workers had little time to spend with their families and would get even less if shops were allowed to open on Easter Sunday.
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