Prime Minister Jacinda Ardern says a trans-Tasman travel bubble is "a long way off" as Covid-19 cases grow across the ditch.
Yesterday, Victoria recorded 671 new cases of the virus - it's second-highest daily total - and seven further deaths.
The state now has around 11,500 cases of Covid-19.
Overnight, five million Melburnians spent their first night under a citywide, coronavirus-enforced curfew that will last the next six weeks.
This morning on TVNZ1's Breakfast, Ms Ardern said what's happening across the Tasman was a reminder for Kiwis to stay vigilant to Covid-19 and keep testing up.
"It's incredibly difficult to watch to see our cousins over the ditch going through this, it's also a message to us to continue to maintain our vigilance," she said.
"In terms of repercussions for our wider plans around a trans-Tasman bubble, obviously that will be a long way off given what they're experiencing right now."
Before the situation escalated in Victoria, there were talks about a bubble between New Zealand and Australia as early as September.
"I can't see how that could be even a remote possibility at this point," Ms Ardern said.
"One of the things that we set as criteria is things like seeing a country that's free of community transmission. We know, of course, how much work it takes to get to that position and then to maintain it for a sustained period of time.
"So that's part of our criteria and so obviously it is going to take some time, even on the Premier's own admission, quite some time for them to get their cases down let alone be in a position of being free from community transmission for a period."
People in the tourism industry here had hoped for a bubble to bring big money into New Zealand, though.
However, Ms Ardern said when she last visited Otago's skifields she found many in the tourism sector were surprised by the number of Kiwis visiting the area.
"I do think that they've been surprised by the numbers of patronage, the number of New Zealanders, which is fantastic, who are visiting."
But Ms Ardern said she was "not happy" with testing numbers for Covid-19 in New Zealand.
"We like to keep that surveillance up, it's part of what gives us that reassurance that people who may be experiencing illness when they're offered a test take it and we see that it is not Covid-19. It helps give that ongoing surveillance and reassurance.
"My plea is say yes to the test, if you're at your GPs and they offer you a test please take it," she added, as some people have been declining tests.