The public servant who lost a notebook that details a possible merger of New Zealand's main spy agencies has been identified as a Treasury official.
The possible merger of the Security Intelligence Service (SIS) and the Government Communications Security Bureau (GCSB) was revealed in the hand-written notes, found lying in a Wellington street by a Radio New Zealand journalist .
Treasury Secretary John Whitehead issued a statement on Tuesday morning saying the incident was regrettable and he had apologised to Prime Minister John Key.
Mr Whitehead says the staff member concerned dropped the notebook on the way to a meeting at Parliament and immediately told her manager. He says the official is careful, meticulous and is distressed by what has happened.
The notes, written about a fortnight ago, say a merger of the country's intelligence agencies is one of three possible outcomes of a review being conducted by former Foreign Affairs Secretary Simon Murdoch.
The State Services Commission and Mr Key have confirmed Mr Murdoch has been employed to look at opportunities for the security services to work more effectively together.
Sources say a merger of the SIS and the GCSB has been talked about for years.
The notes also suggest a possible tie-in with yet another intelligence agency, the External Assessments Bureau, which operates out of the department of Prime Minister and Cabinet.
Radio New Zealand's political staff say there was information in the notebook across a range of issues.
The Treasury statement said issues raised by the incident are being followed up internally.
Review underway - PM
Prime Minister John Key is also the minister in charge of the SIS and GCSB. He told Morning Report it is too early to say what will come of the review, which is still underway, but a merger may be one recommendation.
Mr Key says he asked for a review to look at whether the agencies have the right structure, the future areas of growth or change for the services, and to assess their value for money.
The Prime Minister says it sounds as though the notebook has dropped out of a jacket pocket or simply been left behind, and although he is concerned that sensitive information was lost, it appears to have been human error.
"We'll ask some questions but people do make mistakes, and from time to time they happen," he says.
Mr Key says he would not like to see the person lose their job.
The Labour Party's Phil Goff also says it is not a sacking offence as it is not a national security issue.
As the leader of the opposition, Mr Goff sits on a security committee chaired by the Prime Minister and says he is not aware of a merger proposal, but believes it is worth considering in the agency review.
"They have functions to perform, if they can perform those functions more effectively by working together then that should be looked at. But I haven't seen the information yet to see whether that's a good idea or a bad idea," Mr Goff says.
The State Services Commission says work on the review the country's security services is at an early stage and it will not comment on any options until Mr Murdoch's report is complete.
The SIS investigates and gathers information about possible threats to New Zealand's security and collects foreign intelligence and the GCSB operates the Waihopi Base in Malborough, which can monitor and intercept phone calls and emails.