Former immigration minister Anthony 'Aussie' Malcolm says New Zealand's reputation abroad will be damaged by accepting refugees from Australia's asylum centres.
Mr Malcolm, an immigration consultant, told Radio New Zealand the deal announced last week for 150 asylum seekers to be brought here from Australia was "a tragedy".
He said the agreed United Nations conventions on dealing with refugees in a humanitarian way had been ignored by Australia.
"Australia and Australia alone stands out from the rest of the world with arguments about queue jumpers and all sorts of populist jargon that actually hides racism, and now New Zealand has joined Australia it's a tragedy," Mr Malcolm told Radio New Zealand.
"We've left the community of European nations and responsible nations around the world and joined a minority of one. We've gone the occa way.
"It couldn't be a worse outcome."
The asylum seeker deal was announced during Australian Prime Minister Julia Gillard's visit to Queenstown last week.
The 150 will be asylum seekers who have been approved as refugees in one of Australia's recently re-opened offshore processing centres in the island state of Nauru or Manus in Papua New Guinea.
Prime Minister John Key justified the new arrangement by indicating it was New Zealand's way of paying its way for use of Australia's more sophisticated intelligence gathering on illegal migration, which is shared with New Zealand.
Mr Malcolm said the deal was damaging to New Zealand's reputation.
"I think New Zealand's standing as an international citizen reduces, and I think our ability to take leadership positions reduces," he said.
He said New Zealand was in a position to provide leadership and advice to countries like Indonesia and Malaysia to resolve the refugee problem "at its root cause".
"Instead of providing that leadership we're going down this rather ungentlemanly path. It's very sad," Mr Malcolm said.
Mr Key said this morning that he didn't believe there would be any political fallout from the asylum seeker deal.
"At the end of the day we're going to take 750 refugees [as part of New Zealand's international obligations]. So you're simply arguing where you source them from," Mr Key told Newstalk ZB.
"We're helping out our mates a little bit, but we get a hell of a lot in return, mark my words."
Mr Key said during his prime ministership there had been many occasions that showed Australia's commitment to acting on refugee boats in Australian waters, and the value of having access to their "big intelligence network" made the deal struck last week "worth it".