The Prime Minister has hit out at Labour leader Andrew Little's trip to Canberra to lobby for expat Kiwi's rights - claiming the visit could jeopardise progress being made through quiet diplomacy.
But Labour says John Key has only talked about improving Kiwis' pathway to Australian citizenship after it raised the issue with Australian Prime Minister Malcolm Turnbull, and arranged Mr Little's Canberra visit.
Mr Little and Phil Goff will on Wednesday present before two committees, and meet with Australian Immigration Minister Peter Dutton and Opposition leader Bill Shorten.
Mr Key this afternoon said the trip could potentially work against progress he felt was already being made.
"I certainly hope Andrew Little doesn't make things worse...I'm not being stupid about it, but there is movement in the Australian system, but the more they highlight that to Australian MPs the more pushback you might get and not support.
"There is a degree of diplomacy about this stuff that we can get progress if we work behind the scenes, in my view."
Both Labour and National-led Governments have been lobbying for change since Kiwis' rights were greatly reduced in February 2001 by John Howard's Liberal Government.
When the Australian Government was looking to introduce the new rules, it had asked New Zealand to pay $1 billion a year to cover expat Kiwis' welfare costs.
Australia was also worried New Zealand was being used as a back door by migrants from the Pacific and Asia.
The Australian request was rejected after New Zealand Treasury provided information that showed Australia took in much more than that in tax from the group.
New rules then introduced meant Kiwis arriving to live in Australia were issued with special visas, under which they have no welfare safety nets in case of injury or misfortune, cannot vote and have no automatic path to permanent residency or citizenship.
Mr Little said criticism of his trip came after no progress on the issue from the National Government.
"The issues are not new - John Key has been Prime Minister for seven years with no progress having been made. Progress really only seems to have been made since I started talking about the issues, including with Malcolm Turnbull on his recent visit, and when this trip was arranged."
Asked what changes Australia could make, Mr Key said there were "many ways you can slice the onion", and the Australians would need to look at thresholds.
"The challenge for Australia is the fiscal cost...nothing Andrew Little is doing is going to help. What will help will be if Malcolm Turnbull makes the call that he wants to put some money into this to make it happen."
There are an estimated 250,000 to 350,000 Kiwis living in Australia on "non protected" visas.
Joanne Cox, spokeswoman for New Zealand lobby group Oz Kiwi, will meet Mr Little in Canberra, and said his advocacy was positive.
The Australian Labor Party had at its annual conference earlier this year adopted a resolution that points to giving expat Kiwis a path to citizenship.
That, and Mr Key's recent comments signalling progress on the issue, gave the group "cautious optimism", Ms Cox said.
"That is quite a good signal, I would say. But only time will tell."