The comments, made by Labour politician David Shearer on TVNZ on Sunday night, come after leaked reports to the Guardian revealed that children on Nauru have suffered sexual and physical abuse.
Mr Shearer has written to Australia’s high commissioner in Wellington calling for 150 refugees to be settled in New Zealand on the condition that Australia’s offshore detention camps were closed, according to The Sydney Morning Herald.
It’s not the first time New Zealand has offered to take refugees. However, Australia has always refused to allow refugees to settle in New Zealand, saying that it was counter to Australia’s “stop the boats” policy.
Under international law, it is not illegal to seek asylum in Australia.
Mr Shearer said that the leaked reports “highlighted the fact that [Australia’s refugee] policy is unsustainable. I mean it's almost like Australia has lost its moral compass in terms of where it's going.”
"I really do think New Zealand, however it can, should make the offer to say 'look, what is it we can do to short-circuit this and bring these kids' detention to an end. I do think Australia's reputation is being diminished as a result."
Mr Shearer’s comments come as the leader of Britain's Liberal Democrats party criticised Australia’s immigration policies.
"I have written to Boris Johnson urging him to meet urgently with the Australian high commissioner to express deep concern about the situation in Nauru, and stress that their responsibilities under the 1951 convention apply the same in Nauru as they would to refugees in Australia," Tim Farron told the Guardian.