Labour leader Jacinda Ardern will respond tit-for-tat if Australia charges New Zealand students more to study at their universities.

An eye for an eye, says Labour leader Jacinda Ardern: If Australia increases fees for New Zealand students, she would do the same to Australian students studying in New Zealand.

Ardern threatened retaliation during Newshub's leaders debate on Monday night, saying "if they lock us out of tertiary education, we will lock them out of it here."

It was in response to questions over diminished rights for the 650,000 New Zealanders living in Australia - that Government has embarked on a number of welfare cuts and changes to entitlements for New Zealanders in recent years.

MICHAEL BRADLEY National Party leader Bill English has maintained the long-held Government view it's better to take the high road, and preserving the relationship would be the only way to improve New Zealanders rights in Australia.

But the New Zealand Government has been reluctant to respond in kind, maintaining the position that it was preferable to take the high road across all issues, and New Zealanders' rights there would be better preserved by maintaining a strong relationship with Australia.

READ MORE:

* Labour commits to lifting 100,000 kids from poverty by 2020

* Who won the second leaders debate?

* Bill English and Jacinda Ardern go head-to-head on policy in second leaders debate

* Truth or fable? Fact-checking the second leaders debate

Ardern has taken her debate-night edict further.

LAWRENCE SMITH/Stuff.co.nz Prime Minister Bill English and Labour leader Jacinda Ardern speak to media after the second leaders debate in South Auckland.

"There's been talk of New Zealanders being locked out of having the same access to tertiary education in Australia as Australian students.

"Our view is that if those rights are removed, we should likewise do the same for our subsidised tertiary education in New Zealand.

"On benefits I hold a different view. We're still fighting for New Zealanders' rights in Australia, I think we should maintain the moral high ground that it's only right that if you pay taxes, you have access to those benefits.

"So we're maintaining them in New Zealand, while we continue to argue for them in Australia."

Ardern has already found herself on the wrong side of Australian Foreign Minister Julie Bishop, who controversially said she would find it hard to trust a New Zealand Labour Government.

A diplomatic row was sparked after it emerged Labour whip Chris Hipkins lodged questions relating to the citizenship scandal that revealed Australian deputy prime minister Barnaby Joyce was a New Zealander, and potentially ineligible from being elected.

Ardern said she was "not at all" worried the stance could further damage her relationship with the Australian Government. But given Labour had a policy to incrementally introduce free tertiary education, Australia shouldn't be surprised at the move.

National leader Bill English said his Government would continue with the diplomatic line it has adopted.

"We've made significant advances over Kiwi rights in Australia, by engaging with them constructively.

"They have agreed to open up the pathway to citizenship for tens of thousands of New Zealanders now, which gives them the full rights of an Australian citizen, if they decide to become an Australian citizen," he said.

"It would be pretty silly to then slap the Australians over some detail somewhere, when we've made significant progress."

English said the Australian Government was not suggesting any further reduction in New Zealanders' rights, and the Governments were working closely on difficult cases.

"They're not proposing changes that warrant retaliation, and I think talk of retaliation is likely to make it harder to make progress."

- Audio courtesy of RNZ

* Comments on this article have been closed.