A five-wicket haul from Shane Bond was backed by an unbroken stand by Stephen Fleming and Lou Vincent who needed just 27 overs to knock off the 149-run target in the first game of the Chappell-Hadlee Trophy series here on Friday.
New Zealand at full strength exposed the inexperience of an Australian side missing Ricky Ponting and Adam Gilchrist by choice, and Andrew Symonds, Michael Clarke and Brett Lee through injury.
The makeshift Australians had trouble getting into rhythm with the bat and had particular trouble handling Bond, making 148 all out three balls short of their 50 overs.
Then their defence of a low target suffered from wayward bowling and dropped catches.
As a result, Vincent cracked 73 from 87 balls and Fleming faced just 76 deliveries for his 70 as they produced a record opening stand for New Zealand and the first century from a New Zealand opening partnership in 22 years.
Australia's woes were summed up late in the New Zealand innings when Vincent took off his gloves and began walking from the pitch, certain he was going to be caught after he top-edged a pull shot.
But he had to be called back by Fleming as a communication mix-up meant neither the bowler Mitchell Johnson nor the close-in fielder Brad Hodge were able to reach the simple chance.
It was a rare third successive loss for Australia, after losing two in a row to England in their recent home tri-series finals, and their first-ever 10-wicket hiding.
Stand-in captain Mike Hussey described the defeat as "demoralising" for Australia, who need to win the three-match series if they are to defend their world number one ranking from South Africa.
"It's probably as low as we've been or can go," he said.
"We've got a new group at the moment and we've just got to mould together as quickly as possible."
An elated New Zealand captain Fleming, who won the crucial toss and made Australia bat first under overcast skies, said man-of-the-match Bond set up the victory.
"It's the best I've seen him bowl for some time and not just because he got five wickets. His control was outstanding, and his thought processes were great."
After his first spell of six overs, Bond had two for seven, with Phil Jacques spooning a slower ball to Daniel Vettori and Brad Haddin bowled by a ball which pitched outside the off stump and cut back sharply.
When he came back for his second spell, Bond pulled off a magnificent caught-and-bowled which left batsman Cameron White staring in disbelief. Bond finished with 5-23.
White blasted a slower ball straight down the wicket only to see Bond lean to his right on his follow-through and snatch up the ball one-handed just above the ground.
Bond then cleaned up Nathan Bracken and Brad Hogg at the tail and added to his purple patch by catching Shane Watson at long-off after the Australian had skied spinner Daniel Vettori.
Vettori also dismissed Hodge to finish with two for 26, while Mark Gillespie (2-27) and Craig McMillan (1-3) were the other successful bowlers.
McMillan dismissed Hussey who top-scored with 42 off 96 balls - illustrating the difficulty the batsmen had scoring freely.
Australia 148 all out in 49.3 overs (Mike Hussey 42, Brad Hodge 22, Brad Hogg 20; Shane Bond 5 for 23, Vettori 2 for 26) lost to New Zealand 149/0 in 29 overs (Lou Vincent 73 n o, Stephen Fleming 70 n o) by 10 wickets.