Deputy Prime Minister Bill English says there is no evidence New Zealanders held in Australian detention centres are being treated badly.
Mr English's comments come after the suicide of a 23-year-old New Zealand-born man, who was held in a high-security prison while waiting to be deported to New Zealand.
Under new rules introduced late last year, anyone who is not an Australian citizen and has served more than a year in prison is liable for deportation.
As of August, the numbers of New Zealanders being held in Australian detention has risen to almost 200.
Mr English told TV3 today that the government would act if it had concerns over any individual cases.
"That's the first duty of the government - to ensure that they are treated properly - and there isn't evidence of shocking treatment or appalling treatment," he said.
He said Australia had always had used deportation, it had just lowered the threshold.
"They are not breaking their law, as far as we can see. And to change the situation fundamentally, we have to persuade them to change their law and the Prime Minister is making a judgment about what might be the most effective way to achieve that."
But Labour's acting leader Annette King was not impressed by Mr English's comments.
"It probably shows a level of ignorance that you wouldn't expect from the deputy Prime Minister of New Zealand - and a lack of compassion and feeling for the families and the children of those who are facing deportation and are locked up in a detention centre indefinitely."
Mr English needed to work out a better deal for New Zealanders, she said.
"What Bill English should do actually is put himself on a plane and go to Australia and start some meaningful discussions with the ministers in Australia on their policy," she said.