Prime Minister John Key believes proposals to incorporate the silver fern into a new flag could be worth 'billions' to the New Zealand economy.

A new flag is "gonna be worth billions" to New Zealand, Prime Minister John Key says.

In an interview on More FM on Thursday morning, Key hit back at critics of the flag referendum.

He said one of the main problems people had with the vote was the cost.

Kevin Stent "Basically in the end it's gonna be worth billions over time," says John Key of a proposed new flag.

"People say it will cost $26 million, it will cost less than that," he said.

He argued that the flag would make New Zealand money in the long term.

"How much is it worth ultimately if we change our flag and people recognise and buy our products?

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"Basically in the end it's gonna be worth billions over time."

The two-step referendum on the flag was announced by the Government last year, with Key favouring a move away from the union jack on the current ensign.

A panel is currently considering more than 10,000 designs submitted by the public.

The panel will choose four options from those designs. In the first referendum, the public will rank those four options.

In a second referendum, the existing flag will be pitted against the most popular choice.

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When prompted on whether the flag change would be his legacy, Key said the flag debate started before he became Prime Minister.

"It's not about me," he said.

"My legacy, I think, will be the economic management of the country, the way we stood behind Christchurch, so many other things. Hopefully my positivity as a prime minister."

Key referred to Canada's flag change in 1965 to support his arguments for a change. He said the old Canadian design was similar to New Zealand's current flag and that the Canadian government selected a new design without a referendum.

"Show me a single Canadian on their planet who would go back to their old flag? Not a single Canadian would."

SUMMARY OF JOHN KEY'S 10 REBUTTALS TO KEEPING THE FLAG

1. "You're a bit late."

The flag has been changed before, Key said.

"It's actually our third flag," he said. "You're a bit late."

2. "Sheer confusion."

"No one knows our flag internationally," he said.

3. "People fought and died under the flag, I understand that completely, and that's the line that the RSA runs."

However, while Key respected the RSA, he said Commonwealth war graves were decorated with the silver fern, not the flag. He said the flag was about "values and principles of the country".

4. Other Commonwealth countries have changed their flag.

17 out of 20 Commonwealth countries changed their flags, Key said. "Odd thing maybe in a way is not changing."

5. "I'm the biggest constitutional monarchist out."

To those who feared New Zealand would then become a republic, Key said he wanted the Queen to be the Head of State.

6. "Look at the Canadian flag."

Key said wearing the New Zealand flag on a sweatshirt, no one would know what it was. Unlike the maple leaf.

7. "We simply don't use it."

Key referenced sports games where New Zealanders don't wear the flag.

8. "Building the sense of a young multicultural country"

Key said the flag will help young people to promote New Zealand overseas.

9. 26 million? "It'll cost less than that."

"How much is it worth ultimately if we change our flag and people recognise and buy our products? Basically in the end it's gonna be worth billions over time."

10. "It'll never be the right time."

To those who think now is not the right time, Key said it will never be.

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