The widening of powers of the Government Communications Security Bureau under a new bill has been described as a substantial change to the mass surveillance of New Zealanders.
The Intelligence and Security Committee heard submissions on Wednesday.
Tech Liberty New Zealand, a civil rights group, said a big threat to civil liberties is the collection of metadata, that reveals patterns of communication, such as numbers called and the length of conversation.
It said a recent report showed the GCSB does not consider the collection of metadata as something that should be constrained and that is wrong.
It said metadata can be used to determine who someone associates with, their politics and where they go and what they do.
Megaupload chief executive Vikram Kumar, a former Internet New Zealand director, said the bill needs to be tightened. Mr Kumar spoke as an individual.
He said the bill would allow the Government Communications Security Bureau to spy on New Zealanders just in case, and without any oversight.
Mr Kumar said it would also put New Zealand's economic advantage of having robust privacy laws, at risk.
NZers don't know extent of spying - Dotcom
Kim Dotcom says the public does not realise the extent of the spying being carried out on New Zealanders.
The internet businessman appeared before Parliament's Intelligence and Security Select Committee on Wednesday.
The Government introduced the legislation after the Government Communications Security Bureau broke the law when it monitored Mr Dotcom who is a German national, but a New Zealand permanent resident.
Mr Dotcom told Morning Report the bill must not pass without an independent inquiry, and that would reveal New Zealanders are already monitored extensively.
He said he has documents about his own case that shows how the spy agency operates and that it uses an American surveillance program called PRISM.
Kim Dotcom has also re-iterated his accusation that Prime Minister John Key knew about him earlier than he has admitted.
Parliament's Intelligence and Security Committee is chaired by Mr Key who has always maintained that he only became aware of Mr Dotcom when he was raided by the police.
Mr Dotcom says he has proof and it will come out at an extradition hearing which is yet to be scheduled.
But Mr Key says Mr Dotcom is wrong and is a conspiracy theorist.