Australia struggled early after losing two quick wickets for just twenty runs, but captain Ricky Ponting and Andrew Symonds steadied the ship with 58 runs each as the reigning World Champions recovered to post a total of 240-9.
In reply, New Zealand’s innings was nearly over before it started as the top order collapsed to be 35-6 after just 15 overs, thanks largely to an opening spell from Glenn McGrath in which he took 3-22 in his ten over spell.
But just as their lowest record total of 65 looked of being in danger Daniel Vettori (79) and Jacob Oram (43) made the Australians fight as they added 103 for the seventh wicket.
Just as the partnership looked to be getting their side back into the match, Symonds struck by having Oram stumped in the 36th over before and Vettori was bowled by Mitchell Johnson in the 43rd.
Despite the support of local fans, the fight back was soon over as Australia clinched their 16th victory in the last 18 meetings and at the same time booked a place in the final against the winner of the semi final between South Africa and the West Indies.
To the stands! Lee celebrates in
with his usual vigour
New Zealand pace bowler Kyle Mills stunned the Australians with his aggressive bowling and finished with impressive figures of 4-38, however his own batsmen undid the good work with a poor showing once at the crease.
McGrath had Lou Vincent caught at second slip by Ponting for one and Brett Lee bowled Nathan Astle for zero as the Black Caps slipped to 20-2 by the seventh over.
Two more wickets fell in eight balls at the score of 30 to effectively end New Zealand's challenge.
McGrath forced Hamish Marshall to edge a catch to wicket-keeper Adam Gilchrist, before New Zealand captain Stephen Fleming fell in Nathan Bracken's first over.
McGrath then bowled Peter Fulton for two and had Brendon McCullum caught by Damien Martyn to leave New Zealand struggling at 35-6.
The pigeon has landed
Earlier Damien Martyn (26) helped Ponting add 66 for the third wicket before he fell to a marginal leg-before decision off Vettori in the 20th over.
Ponting moved to his 55th one-day 50 in the 27th over, but was dismissed two overs later when he holed out to mid-on against Mills.
Australia had not made the final in the four previous editions of the biennial tournament despite winning the last two World Cups in 1999 and 2003.