Australian Prime Minister Julia Gillard has ruled out making New Zealanders living across the Tasman eligible for welfare payments such as the unemployment benefit.
Ms Gillard arrived in Queenstown on Friday afternoon to meet Prime Minister John Key for annual talks.
The leaders' meeting marks 30 years of the Closer Economic Relations agreement between the two countries but there are sticking points in the relationship, particularly over the treatment of New Zealanders living across the Tasman.
Ms Gillard immediately scotched any suggestion that Australia would soften its attitude to New Zealanders living there.
"Because of our special relationship we have arrangements for New Zealanders that have a generosity associated with them that is not given to any other nationals from any other country when they come to Australia," she said, referring to work and medical care.
Ms Gillard says she knows the matter will be raised in her meeting with Mr Key on Saturday.
Mr Key said on Friday he would be raising the issue but had no expectation that there would be any change.
But in answer to a media question he said there was no question of scaling back the benefits available to Australians living here.
The Labour Party has urged the Prime Minister to lobby his Australian counterpart to improve the treatment of New Zealanders living across the Tasman.
Both leaders indicated their talks will include the issue of doping and match-fixing in sport, which has arisen from an Australian Crime Commission report this week.
They will also discuss whether New Zealand could take some asylum seekers from Australia as refugees.
Mr Key did not reject suggestions the Government here was prepared to take some, saying the issue of asylum seekers would be on the table on Saturday.
Mr Key says the problem is a regional one.
Other matters they are expected to look at include what further steps they can take to create a single trans-Tasman economic market.
They are also likely to discuss regional matters, including the provision of support following this week's earthquake and tsunami in Solomon Islands.
The two leaders formally meet on Friday evening and again on Saturday morning.
After meeting on Saturday Mr Key and Ms Gillard will hold a joint news conference at midday before laying wreaths at the Queenstown War Memorial.
Later the two will visit nearby Arrowtown.
Ms Gillard leaves early on Sunday to return to Australia.