The Parole Board says it is encouraged by a "distinct change" in Central Hawke's Bay murderer Hulio Ataria - despite 26 misconduct charges, including 12 positive drug tests, while in prison.
The former gang prospect has now spent more than 11 years in jail after stabbing to death father of three Mark McCutcheon outside the Sandford Arms Tavern, Ongaonga, in 2009.
Ataria's first parole hearing was held on Wednesday last week.
In its written decision, the board said parole was refused as the risk was still "undue", yet there were positive signs.
Ataria was found guilty of murder in a High Court trial at Napier, after a fight in January 23, 2009. The then gang prospect had been observing an argument between one of his gang associates and the associate's partner. McCutcheon tried to intervene and, in an ensuing fight with Ataria, was stabbed three times and died shortly afterwards.