It appears our biggest domestic terror threat is either Tame Iti's training camps or Dotcom's (alleged) copyright infringements. I've got more to fear from a prostate exam than from whatever our collective security apparatus is protecting us from.
Still, the issue is topical. As the law stands, the SIS or police can spy on you or me if they get an interception warrant from a judge. Potentially, this can include aggregated information, the "metadata" at the heart of Edward Snowden's revelations about the NSA in the US.
The electronic trail we create as we use our phones and computers could be collated and analysed. The GCSB cannot, even with a warrant, spy on citizens or legal residents; they are restricted to foreigners.
For some unexplained reason the GCSB has the good gear and smart kids. The domestic agencies are more Jacques Clouseau than James Bond but because not all threats come from foreigners, the Government is updating the law. The new security bill before Parliament can be distilled to two changes:
The GCSB can legally spy on New Zealanders on a contract basis for domestic agencies that have a valid interception warrant.