Prime Minister Julia Gillard has used a visit by New Zealand Prime Minister John Key to praise his country for outdoing Australia by having "the guts" to price carbon.
Ms Gillard said she was determined Australia would catch up to New Zealand, which introduced an emissions trading scheme (ETS) in 2008.
"We love Kiwis, they're family for us, but I think Australians would be asking themselves if the Kiwis had the guts to go and price carbon, why can't we?" she said at a joint press conference with Mr Key.
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"Well my answer is, we can. New Zealand is in front. We will catch up."
Mr Key declined to comment on specifics of the Gillard government's plan to price carbon.
"But what I can tell you about the ETS in New Zealand is, it's worked," he said.
The ETS had driven growth in the renewable energy sector and slowed deforestation, he said.
The leaders agreed to establish a senior officials group to work on ways to link the two countries' schemes in the future.
They also agreed to establish a joint Australia-New Zealand Therapeutic Products Agency and further streamline trans-Tasman air travel by trialling a new SmartGate system.
The prime ministers also agreed to work closely to organise in the lead up to 2015 to mark the 100th anniversary of the Anzac landings in Gallipoli.
But Ms Gillard warned there was a "very major difference of opinion" looming in the bilateral relationship - this year's rugby World Cup.
Earlier, Mr Key was greeted with a 19-gun salute and a marching band playing Waltzing Matilda as he arrived at Parliament House in Canberra.
He inspected the Federation Guard before joining Ms Gillard for the Australian and New Zealand national anthems.
Mr Key became the first New Zealand leader to address Australia's parliament.
Mr Key said the invitation to address parliament was an "honour" and a "privilege". Ms Gillard became the first foreign leader to address NZ's parliament earlier this year.
Ms Gillard confirmed she would attend the Pacific Islands Forum in Auckland in September.
During his address to parliament, Mr Key has thanked Australians for showing support during recent disasters "like only family can".
He commended Australia on its loyalty and support during the Pike River Mine explosion and Christchurch earthquake disasters.
"When an explosion ripped through the Pike River Mine in November last year you sent your specialist experts, your machinery and your hope," Mr Key said.
"When the devastating Christchurch earthquake struck us in February you came to our aid immediately, unreservedly and with open hearts.
During his address to parliament, Mr Key has thanked Australians for showing support during recent disasters "like only family can".
He commended Australia on its loyalty and support during the Pike River Mine explosion and Christchurch earthquake disasters.
"When an explosion ripped through the Pike River Mine in November last year you sent your specialist experts, your machinery and your hope," Mr Key said.
"When the devastating Christchurch earthquake struck us in February you came to our aid immediately, unreservedly and with open hearts.
"You have shown New Zealand a degree of loyalty and support that only family can."
Earlier, Opposition Leader Tony Abbott used a welcoming statement for Mr Key to take a pot-shot at Labor's plan to introduce an ETS.
Mr Abbott congratulated Mr Key for "watering down" the ETS his conservative government inherited.
But he said if the coalition in Australia inherited a trading scheme from the Gillard government it would be "rescinded" altogether.
"In this country your sister party will go further and do better," Mr Abbott told parliament.
"Should we inherit any carbon tax we won’t just reduce it - we will rescind it."
The opposition leader also congratulated Mr Key on formally re-establishing military ties with the US, once more making the ANZUS (Australia New Zealand United States) alliance fully functioning.
That followed the decision of former New Zealand prime minister David Lange in 1984 to ban visits from US nuclear-armed or powered warships.
Mr Abbott said Australia very much valued New Zealand’s military contributions to East Timor, the Solomons and Afghanistan.
"We are Anzac brothers in arms once more," he said.
AAP
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