Little progress made on NZ 'guest workers'

The Australian government has a "strong understanding" of the plight of Kiwis who cross the Tasman to live but can't get residency, Prime Minister John Key says.

There doesn't seem to have been much progress made, although Mr Key discussed the issue with Australian Prime Minister Julia Gillard on Sunday during the joint cabinet meeting in Melbourne.

A law change in 2001 reclassified Kiwis from permanent residents to temporary ones, cutting off their right to claim many social security benefits.

A new system is in the pipeline but Ms Gillard says there are financial implications and a lot of work still has to be done.

"There's progress on that but it's in Australia's hands," Mr Key said on Monday.

"We think there are over 100,000 New Zealanders who live across the Tasman who fall into a category almost like a guest worker - they don't have residency and may never be eligible for residency."

Asked on Radio New Zealand whether he was given a commitment that something would be done, he replied: "There's a strong understanding of the issue, we understand the financial implications for Australia but I'm confident that over time some progress can be made."

Mr Key described the weekend of talks between the two governments as very successful.

The prime minister and seven senior cabinet ministers took part and agreements included:

• Queensland will use a trans-Tasman criminal history sharing trial to check out job seekers.

• Defence co-operation is to be increased and streamlined. The moves will include joint purchasing of military hardware.

• The Australian and New Zealand productivity commissions will work together on a joint study to see how economic ties can be strengthened.