Mr Dunne pointed to Resource Management reforms as one area which he could have greater influence over if National lost a seat. He said the reforms, which he has expressed concerns about, would "take on quite a different hue" if National relied on his vote to pass.
Mr Dunne noted that his party signed a confidence and supply agreement when National had an outright majority. National has since lost a seat in the final election count and could lose another in Northland.
Asked whether he would seek greater concessions from National if it lost another seat, he said: "That's something I'd want to consider. I don't have an immediate answer at this point."
The Northland seat was vacated when Mr Sabin stood down last month for "personal reasons".
He won with a 9000-vote majority in the September election.
Mr Peters, who was born in the electorate, said it had been neglected by the Government.
However, his party has not run a candidate there in the past three elections. It won 12.7 per cent of the party vote in 2014.
National's campaign manager Steven Joyce said voters would question whether Mr Peters was the "fresh, new energetic face" for Northland.
"Forty years in politics ... I think people will look at it as a Winston's greatest hits tour," he said yesterday.
Mr Joyce conceded that Mr Peters had a following in the electorate and said National would "have to take everybody seriously".
Mr Peters' popularity in Northland could hurt Labour, which has chosen lawyer Willow-Jean Prime to contest the seat. Labour leader Andrew Little said yesterday he would not pull his candidate from the race to give Mr Peters a better chance.
If Mr Peters did win the byelection, it would enable New Zealand First's 12th-ranked candidate, Invercargill-based candidate Ria Bond, to enter Parliament.
Northland candidates
Act Party — Robin Grieve
Labour — Willow-Jean Prime
National — selected today (nominees: Mita Harris, Matt King, Grant McCallum, Mark Osborne, Karen Rolleston)
New Zealand First — Winston Peters
Greens, Maori Party, United Future — no candidate
Nominations close on Tuesday, byelection held March 28.