The Labour Party is warning the Government that it should stay out of what it says is an Australian problem with asylum seekers.
Australian Prime Minister Julia Gillard announced on Tuesday that her government is negotiating with East Timor to set up a centre to handle new boat arrivals before they arrive in Australia.
She said she had held talks with East Timorese President Jose Ramos Horta and New Zealand Prime Minister John Key.
The New Zealand Government says it has been warned that boats used by people smugglers are getting bigger and better, and may soon be able to reach this country.
Prime Minister John Key says boat people and asylum seekers are a regional problem, and the Government is open to talks with Australia about a regional solution.
However, Labour says New Zealand has nowhere near the same problems with boat people, and should leave Australia to handle its own policy in this area.
Labour leader Phil Goff says there is only a remote possibility people smugglers' boats will reach New Zealand. All 75 ships intercepted this year have been off the coast of Western Australia, he says.
Green Party foreign affairs spokesperson Keith Locke says New Zealand should offer to take in more refugees to ease the pressure on Australia.
However, he does not want to see an offshore processing centre established where asylum seekers heading to Australia are "left to rot in some far off place and denied their rights".
East Timor's deputy prime minister, Jose Luis Guterres, says although his government will consider the request, it has already sent a message to Australia's embassy in Dili saying it's not ready to establish such a centre.
Refugee Council president Dr N Rasalingham, says the issue is pure electioneering on the part of the Australian government, and New Zealand should stay out of it.
Amnesty International's refugee spokesperson, Margaret Taylor, says while the issue has become deeply politicised, New Zealand should contribute in its role as a Pacific nation. However, she says Australia must listen to East Timor's plea that it should not become a prison for asylum seekers.
66 detained en route to Australia
The police in Indonesia say they have detained 66 asylum seekers from Afghanistan and Iran who were on their way to Australia when their boat ran aground,.
The migrants were found on a beach off East Nusa Tenggara province in the far east of the archipelago.
The police say the group comprises 34 Iranians and 32 Afghans, and includes four women and five toddlers.
Many asylum seekers pass through Indonesia with the help of people smugglers before embarking on the dangerous boat journey to islands north of Australia.