Prime Minister John Key says taking refugees from Australian detention centres in return for the Australian navy monitoring the sea route is a fair deal.
New Zealand has agreed to resettle 150 of Australia's "boat people" each year. The deal was reached in annual talks between Prime Minister John Key and his Australian counterpart Julia Gillard in Queenstown this weekend.
It means 150 of the 750 refugees New Zealand already takes as part of its commitment to the United Nations High Commission for Refugees will come from Australia, potentially from controversial detention centres like those on Nauru and Papua New Guinea.
Key said the deal will not see New Zealand taking on any more refugees each year, or encourage more people to come to New Zealand
The Prime Minister said he thinks it is a good thing for the country.
"Australia on the ground has huge resources trying to stop these boats actually leaving places like Indonesia, and they do a lot of work for us and we want them to continue doing that for us at no charge, that's one thing.
"The second thing is, we've had boats that have turned up in Australia where people have said we want to come to New Zealand, and one boat that was actually working out how to give it free passage across the Tasman, now once they start doing that they're going to get here we can't stop that we don't want the Australians doing that.
"The third thing is if we get a mass arrival as part of this, we can if we want to we have to change our law, we would effectively be able to process those people in those camps offshore, so there's lots of options for us and we're helping out our mates."
Key says the government has no way of turning refugee boats around, and they cannot sink the boats as that would be inhumane.
He said Australia takes on 20,000 refugees every year, and New Zealand can pick the 150 refugees it wants.
"They have to be genuine refugees. We have to think they are going to settle," he said.
He said Australia has a "no advantage policy".
Amnesty International says it is deeply concerned that the deal does not address refugee protection in the region, and may actually undermine a regional approach to refugees.
Of particular concern is that the 150 refugees to be resettled by New Zealand will still have to wait for years in Australia or in an offshore centre, like those in refugee camps, under the "no advantage policy", Amnesty said in a statement.
"It is extremely disappointing to see the New Zealand Government's support for this policy, in its acceptance of this deal," said Amanda Brydon, Amnesty International's Government Relations Manager.
Amnesty International, along with the UNHCR have repeatedly dismissed the "no advantage" policy as an unrealistic concept that does not align with the reality of refugee situations around the world, Brydon said.
Moreover, countries like New Zealand and Australia who have signed the Refugee Convention should not be purposely trying to lower their standards of protection to deter asylum seekers to seek this protection by boat, but providing that protection as required to meet their international obligations, she said.
It is also disappointing that the New Zealand Government will be including refugees who have arrived in Australia in its already small quota of 750, Brydon said.
"As a country that receives so few asylum seekers arriving at its borders, New Zealand should be focusing on increasing its resettlement program.
"In particular, with countries like Syria, Mali and Afghanistan continuing to produce record numbers of refugees, this is not the time to be taking refugees from a country like Australia.
"There is no reason why the Australian Government cannot protect the refugees who arrive in their territory, instead of continuing to palm them off on neighbouring countries."
Gillard said: "We are looking at what is a regional problem. Collaboration, working together, including working together in this way is of merit."
Australia will monitor the sea and help with processing if "boat people" make it to New Zealand.
However, Amnesty International said it rejects the idea that the deal in any way contributes to a "regional approach to refugees".
If Australia and New Zealand are genuinely committed to a regional approach then they need to engage meaningfully with countries like Malaysia, Thailand and Indonesia, not just each other, Brydon said.
Mass detention law
Labour says it is a back down from Key on the Government's proposed "mass detention law".
The law change before Parliament would allow for the mass detention of a group of 10 or more asylum seekers who arrive by boat.
"Just last year the Prime Minister John Key and his Immigration Minister, Nathan Guy, were describing asylum seekers who arrived by boat as 'queue jumpers' and 'illegal immigrants'," said Labour's Immigration spokesperson Darien Fenton.
"Now, however, it seems Mr Key is prepared to take a number of the very same people - from recently reopened Australian detention centres on Papua New Guinea's Manus Island and Nauru - that he has previously disparaged."