Why did they lie?

I don't think they lied about any of it - if they did, surely they'd have made Nick Harvey more 'heroic' - at least to fit in with American movie conventions - so that Karl Urban could make his character look more like the lead in a fictional movie with the same scenario.
Having watched the film today for the first time, I can't get it out of my head. A scene with Gray is juxtaposed with one of the ocean, the storm within and the external calm of a gentle surf. The shots (and pardon me for the word shots) of Gray huddled in the grass as he brings the flames of his own personal Hell to Aramoana as the police are completely overwhelmed by events, well, I can't shake them.
Also, as a father to two young children, I find myself terribly affected by any scenes involving the deaths of children, but even more so when they're handled as sensitively and unsensationally as this. In other films, when deaths are just almost offhand occurrences and there is no follow up to them, you never forget that you're watching a movie. When Harvey is telling the school storytime tale to Stacey as his colleague cradles an already dead child, I freely admit to crying out loud. There was no intrusive music, no sudden or frenetic camera work, just the characters and the audience, all watching as individuals, I think, lost in their own particular feelings.
Almost unbearably powerful stuff, although this brilliant film will be in my head for at least a week, I don't know if I'll ever be able to watch it again - that's how good it is.