But the Snowden papers show that counter-terrorism is at most a minor part of the GCSB's operations. Most projects are assisting the US and allies to gather political and economic intelligence country-by-country around the world.
That's what is going to give this story legs. If it's proven that the information was used to affect domestic policy or international relations, or if there's strong evidence that it was used to exert economic leverage over Pacific island nations, then New Zealand's credibility in the neighbourhood drops drastically.
In years past, a lot of the voice and data traffic in the South Pacific was handled by a company named Pacific Teleports. They resold bandwidth on an Intelsat bird. The ham-fisted monitoring there was almost a joke. You could actually see an additional 80-100 ms lag introduced at the exact point where the traffic left their earth station in Australia and entered the terrestrial networks there. SSL sessions would break continually.
But people more or less expected this kind of behaviour from Australia. They've never really thought of the Pacific islands region as anything more than an undeclared territory, and ever since George W. Bush appointed Australia the 'sheriff' (his word) in the region, they've been even more ham-fisted in their approach.
New Zealand, on the other hand, has always portrayed itself as a Pacific island country, perhaps the first among equals, but a peer to its neighbours. Its aid programme was more engaged, and it welcomed Polynesians and Melanesians much more warmly than Australia. The difference is similar to the difference between the USA and Canada. Now, imagine Canada being revealed as the primary source of intelligence gathering in the Caribbean.
Australia has always been somewhat brazen in its attempts to influence events in the Pacific islands. New Zealand, in contrast, has (until now) appeared to be the more reasonable of the two. If that changes, then it has the potential to drive these strategically important nations closer to China. I'm not suggesting it would be 1941 all over again, but if it ever came to that, you'd think Australia and NZ would want friends on the islands here, rather than strangers.