Australia has almost lost its moral compass on asylum-seeker issues and New Zealand needs to step in, Labour's foreign affairs spokesman David Shearer believes.
Documents leaked by The Guardian last week detailing sexual abuse of children in the Nauru detention centre "shocked us all", he told Q&A on Sunday.
But the conditions in Nauru are just one of the issues facing asylum seekers - the other is that they're there for the foreseeable future, according to Mr Shearer.
"(The reports) highlighted the fact that this policy is unsustainable, I mean it's almost like Australia has lost its moral compass in terms of where it's going," he said.
"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'."
Prime Minister John Key made an offer to take 150 asylum seekers in 2013, and reiterated that offer again this year, though it has not been taken up.
Mr Shearer said while he disagreed with the policy of offering Australia sovereign control to choose which asylum seekers came to New Zealand, he supported accepting refugees or at least sitting down with the Australian government to discuss the situation as had happened with the Tampa refugees in 2001.
But there would have to be one condition.
"If we were to intervene and get involved in this it would have to be on the basis that these camps are going to close down and we are helping to do that," he said.
Last year the New Zealand government suspended $1.2 million from its aid budget to Nauru because of concerns about civil rights and the rule of law.
It still provides around $1 million in aid to the island nation.