Australian authorities say they recovered a street value of NZ$327 million.
Six people were arrested in the covert midnight operation, including four Australian nationals, one New Zealander and a Swiss national.
It was the second major drug bust in Australia in recent months, after police seized 500kg of cocaine in a Sydney Fish Market on Christmas Day.
According to the Australian Federal Police (AFP), the bust is the biggest ever intercepted by Australian authorities.
The boat's owner has been charged and will reappear in a Sydney court next week.
Officers intercepted a yacht off the NSW coast last week and seized what they described as a "significant" amount of cocaine.
European Union leaders launch scathing attack on Donald Trump
Ms Merkel said she was "gratified" that the Prime Minister had said she wanted to see a "strong EU", even after Britain had left. But she added that there was also a "clear recognition" that Europe needs to step up its independent defense capability.
The maximum penalty for this offence is life imprisonment or 7500 penalty units or both.
"It also highlights the importance of our close working relationships with our local and internal law enforcement partners - without which this operation could not have succeeded", said Gaughan.
Australian Federal Police recovered 1.4 tonnes of cocaine, worth an estimated £192 million ($312 AU), Justice Minister Michael Keenan told reporters.
The drugs were destined for Australia, but authorities feared some may have entered New Zealand, Customs' deputy comptroller operations Bill Perry said.
"This seizure is testament to the strong partnerships and cooperation between New Zealand, Australia and Pacific nations focused on combating drug smuggling operations in the region", he said.
The vessel was put under surveillance and tracked around the Australian coastline before it was boarded on December 12.
- Wall Street welcomes Trump the deregulator
- Apple iPhone production in Bengaluru to commence soon
- USA hopes to have border wall finished within two years, official says
- Barclays PLC Cuts FireEye, Inc. (FEYE) Price Target to $10.00
- ME senator hits White House Holocaust statement
- Here's How Your Senator Voted on Rex Tillerson for Secretary of State
- What slower growth? Facebook soars on strong mobile and video ads
- State Police: Play and be safe on Super Bowl Sunday
- White House says Russian Federation sanctions remain despite Treasury Department amendment
- Defections Put DeVos Nomination in Peril