Mr Molloy's call came on the heels of Tauranga police busting a person playing Pokemon Go while driving.
St John Ambulance Western Bay of Plenty territory manager Ross Clarke said he believed automatic loss of licence would be a good idea but it also came down to more education.
"Anything that enhances road safety, St John's would absolutely endorse.... I think the large majority of the community would agree."
Caroline Perry, Brake's New Zealand director, said driving was the riskiest thing most people did regularly and required people's full concentration.
Ms Perry said the current penalties were not enough to deter some drivers from risking lives.
"We want to see tougher penalties - higher fines and more demerit points - to deter distracted driving. We also want to see a ban on the use of hands-free. Research proves it's the call that's distracting so use of hands-free is also dangerous."
Associate Transport Minister Craig Foss said using a hand-held cell phone while driving may seem a minor offence but for some New Zealanders it would be the difference between life and death.
"Police are targeting drivers who flout the law and I support them in their efforts," he said.
But Mr Foss said it was important to view this issue in context. Between 2012 and 2014 cell phones were involved in less than 0.5 per cent of fatal and injury crashes, he said.
The Government was not currently considering increasing the penalties for using a hand-held cell phone while driving, he said.
"Road users also have a responsibility to drive in a way that keeps themselves - and others - safe."