Basically the crust is expanding at mid-oceanic ridges. The molten magma that surfaces in those regions solidifies into thin crustal plates. These plates are pushed apart until they meet resistance (other plates), and begin to bump up against each other. When they do that, the crust squashes and thickens - both above and below the water. The part that thickens above the water form continents and land masses.
The argument here is that the crust under New Zealand is one such thickened region, just that most of it is still underwater. However, every map of the plates I've seen places New Zealand at the edge of the Australian plate (i.e. there is no major tectonic activity between New Zealand and Australia). So it would seem to me to be more correct to say the Australian continent is actually larger than Australia and encompasses New Zealand and Papua New Guinea.
If there's a revision to the continents that's needed, Europe and Asia need to be combined into a single Eurasian continent.