Any attempt to smuggle people into New Zealand will be met with the full force of the law - and if it was up to the Prime Minister she would destroy the boats if they entered our waters.

It is not new that New Zealand is being marketed as destination for illegal immigrants, Jacinda Ardern says.

Ardern said that New Zealand's laws were strict and people-smugglers would be pursued if they entered New Zealand waters. Ardern said if it was up to her, she would destroy the boats of convicted people-smugglers.

"The idea of New Zealand being used by people-smugglers has been happening for a number of years. This is not new," Ardern said at her post-Cabinet press conference yesterday.

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She was responding to comments by Australian Home Affairs Minister Peter Dutton today that New Zealand is being marketed as a destination for illegal immigrants.

"Some people, it seems, have been told different stories about their destination. New Zealand is now being marketed as a definite destination," Dutton told a news conference today.

Ardern said that as far as she was aware, there had been no increase in discussion around New Zealand being a target for people-smugglers.

"Regardless of New Zealand's policy and regardless of Australia's policy, unscrupulous people with no integrity will promote either destination for their financial benefit without necessarily those victims involved having any sense of reality in either country," she said.

"These things ebb and flow and nothing I've seen is out of character."

Malaysian police intercepted 127 Sri Lankans and arrested 16 other people – Indonesians, Malaysians and Sri Lankans - in an operation targeting a modified tanker off the Malaysian coast early yesterday.

Dutton said the ship had the potential to reach New Zealand.

Ardern declined to comment on whether the ship could have made it as far as New Zealand.

"Regardless of whether it had that capacity or not, the point is that taking a preventative approach to stop it ever leaving a port is the optimal approach. Because regardless of the capacity of any given vessel, that is a treacherous piece of water, it risks people's lives and the people who were undertaking that venture need to be held to account," she said.

New Zealand's Immigration Minister Iain Lees-Galloway said yesterday it was common knowledge that New Zealand had been mentioned as a target in the past.

In December last year, the Government said there had been no suggestion of a credible attempt by people-smugglers to reach our shores by boat following a reported intelligence leak to Australian media that its border officials had stopped four boatloads of asylum-seekers who said they were heading to New Zealand.

"It's simply not credible for someone in a rickety old boat, designed for at best two or three days at sea, to say they're going to sail from Indonesia down to New Zealand. I've seen nothing credible to say that is possible," said Andrew Little, minister responsible for intelligence agencies the GCSB and the SIS, at the time.

In 2015, then-Prime Minister John Key was accused of scare-mongering when he said people-smugglers were now using steel-hulled ships capable of getting to New Zealand.