Sydney gunman Man Haron Monis was known to security authorities. So too was the Muslim convert in Canada who deliberately killed a Canadian soldier with his car in October, and the two men convicted of hacking British soldier Lee Rigby to death in London last year.
But the fact that someone was on a watch list did not mean they could be detained.
"I suspect they were on lists of people that could present a threat," Mr Key said. "But the threshold the authorities have to meet before they can detain someone is very high and for very good reason.
"That is the conundrum that the authorities face between over-using or over-exercising their power but on the other side is the declared desire the public will have to be protected."
Asked if the threshold for detention could be the subject of a comprehensive review beginning next year, he said: "That may be one credible area that they look at."
For the most part the review would look at whether the intelligence agencies and other authorities "have enough tools in their toolbox to meet that balance that New Zealanders would want between freedom and liberty, and terrorism".
Last month Mr Key indicated that 30 to 40 New Zealand residents were on a security agencies' watch list.
Some were simply raising money to support the terrorist group Isis. Some wanted to leave New Zealand to fight for Isis in Syria and Iraq, "and one or two of them look as though they are at least attracted by the notion of a domestic terror threat".
"There are people that have not identical but similar characteristics to the gunman in Australia, and all I can say is that we do everything we can to monitor those situations and make sure we are as prepared as we can be."
Mr Key acknowledged that the Sydney gunman was a lone wolf terrorist and on one level the threat was quarantined.
"At another level it makes it more unpredictable and difficult to control," he said.
