Sending refugees from Nauru to New Zealand would be a "giant magnet" for people smugglers, Defence Industry Minister Steven Ciobo says.
The government intends to evacuate all asylum-seeker children from Nauru by the end of this year.
But Mr Ciobo says he "absolutely" has a problem with Labor's plan to accept New Zealand's offer to resettle some of the refugee families.
"They think it's more humanitarian, they think it's more humane. The only thing that Labor's soft approach is going to do is restart the trade of people smugglers in our region," he told Sky News on Sunday.
Defence Industry Minister Steve Ciobo says accepting New Zealand's offer would encourage people smugglers. Source: AAP
"That's going to be a giant magnet for those that want to come to our country ahead of those that are sitting, unfortunately, in UNHCR camps trying to do the right thing.
"I think that would be a great injustice to those who actually are deserving to come to countries like Australia, the United States or other countries, but who can't afford to pay a people smuggler."
The government has indicated it will only accept New Zealand's offer on the condition refugees sent there from offshore detention are banned from entering Australia.
Labor supports the lifetime ban, but Home Affairs Minister Peter Dutton is still reluctant to seal the deal, fearing it could become a perverse incentive for people smugglers.
