Fresh spying allegations and stalled talks on a joint code of conduct are further damaging Australia's relations with Indonesia, Labor says.
Jakarta has expressed dissatisfaction with Australia's intelligence gathering after new claims that Australia's Defence Signals Directorate offered its US counterpart information on trade talks with Indonesia last year.
Prime Minister Tony Abbott won't confirm the report but has defended spying on its "very good friend" Indonesia, arguing intelligence is gathered in the interest of Australian citizens.
Indonesian Foreign Minister Marty Natalegawa has criticised that response, saying it is "a little bit too much" to argue this latest activity involving talks about shrimp trade was done in the interest of saving lives.
Deputy Opposition Leader Tanya Plibersek says it is clear there are serious issues in relations with Indonesia that need to be addressed.
She says it is important that Australia maintains a warm relationship with its regional neighbour for economic and national security reasons.
"It's important to get that relationship back on track and it would be ideal if this was prioritised by the Australian government," she told ABC radio on Tuesday.
Mr Natalegawa has also lashed out at Australia's border protection policies, an issue which he is due to raise with visiting US Secretary of State John Kerry.
Mr Abbott has expressed frustration about the lack of progress on negotiations for a new joint code of conduct with Indonesia, which Jakarta wants finalised before it will lift a temporary ban on people-smuggling co-operation.
"It's clear that the discussions about a code of communication between Indonesia has stalled and the relationship has deteriorated," Ms Plibersek said.
