An advocate for New Zealanders living in Australia believes Queensland's bid to change the law to allow it to discriminate against New Zealanders living there, is in direct response to a court battle it had with a severely disabled New Zealander.
An amendment to the Anti-Discrimination Act would permit the Australian state to deny support based on a person's residency status without the threat of legal action.
Since 2001, New Zealanders living in Australia long term are not classed as permanent residents.
New Zealander Hannah Campbell has cerebral palsy but was denied disability aid so she took the Queensland Government to court.
Advocate David Faulkner says the tribunal that heard the complaint found it was a strong case of direct discrimination based on nationality.
"One would hope that that signal, which of course, went to the very top of the Queensland Government, would have made them stop the discrimination but instead they're legislating to make the discrimination legal.
"This should be ringing alarm bells everywhere, particularly for New Zealanders resident in Queensland."
Mr Faulkner says the case between the parties was settled and now the Queensland government is moving to avoid paying out millions of dollars to other New Zealanders by changing the law.
The New Zealand Labour Party's foreign affairs spokesperson Phil Goff says Australians permanently living in New Zealand are entitled to the same benefits as other permanent residents, and the same should apply for New Zealanders in Australia.
"If you're there, you're making a contribution to Australian society, you're paying your taxes, you're there long term, there's no legitimate grounds on which you as a Kiwi should be discriminated against and treated as a second-class citizen."
The bill passed its first reading this week.