A joint military operation in Iraq is likely to be the focus of talks between John Key and his Australian counterpart today.

They're holding their annual leaders discussion in Auckland this morning.

Mr Abbott is expected to finalise Australia's commitment in the coming week.

Counter-terrorism measures are also on the agenda, including the issue of stopping foreign fighters and bilateral economic issues.

The two leaders addressed business leaders yesterday from both sides of the Tasman.

Key told the audience the two countries should be working together more closely, in a climate of trust.

"I can produce for you a bunch of official advice that will tell you there is a risk to New Zealand or there is a risk to Australia," he said. "Most of that risk won't play out."

Abbott said he wants to work with the government on free trade deals, but couldn't resist the opportunity to blame New Zealand for some of his country's problems.

He made it clear he wasn't happy with the ASEAN free trade deal in 2010.

"Once New Zealand had achieved its objectives, the shop was shut, so to speak," he said.

"The agreement that we have with ASEAN is not as ambitious."

Abbott says he'd like to see New Zealand and Australia jointly seek a deal with Europe, provided Australia's interests are preserved.