Tariana Turia says her phone was bugged. This was briefly mentioned in the SST story on Sunday, and this is an expansion on that.
The Prime Minister has questioned the credibility of the allegations, and demanded that the sources come forward. This would of course expose them to prosecution under section 12A of the New Zealand Security Intelligence Service Act 1969.
On National Radio a short time ago, Don Brash expressed support for an open and independent inquiry by someone from outside the SIS, saying that the National Party would "put party politics aside". Winston Peters was a little more doubtful, saying that "many allegations are made all the time and most of them are baseless", but that it was difficult to see any reason for the SIS to spy on MPs. (Obviously I'll ignore the enormous irony in both of those statements...)
The Greens likewise want an inquiry, saying that "the present accountability mechanisms are not working" and
"There is no evidence that the Prime Minister or the Inspector-General of Intelligence and Security knows what is going on, and the Intelligence and Security Committee in Parliament has only met for three hours since the last election."
I think the latter point in itself proves the need for more serious oversight. A committee which meets for one and a half hours a year can't even examine the accounts to determine whether there has been a proper expenditure of public funds, let alone act as a proper check and balance on an organisation whose very existence poses a threat to democracy.