Tim Paine has opted against enforcing the follow-on, with Mitchell Starc's third five-wicket haul in seven pink-ball tests giving Australia a 250-run lead over New Zealand.
Starc finished with figures of 5/52 on Saturday to have New Zealand all out for 166, claiming one wicket in the afternoon session after taking four under lights on Friday in Perth.
Nathan Lyon grabbed two and Pat Cummins and Marnus Labuschagne one each, as only Ross Taylor offered any real resistance for the Blackcaps with his 80.
Paine enforced the follow-on against Pakistan in Adelaide but it was a no-brainer in Perth, given the severe heat and a hamstring strain stopping Josh Hazlewood from bowling.
The question will be how long Australia bat for after going to tea at 1/0, and whether they opt to declare and have New Zealand bat again under lights on Saturday night at Optus Stadium.
Lyon took the key wicket of Taylor when he caught the right-hander's edge, as Steve Smith took a smart catch low to the ground at first slip.
It ended Taylor's love affair with Perth, after hitting 290 on his last visit against Australia at the WACA.
Smith had also taken a superhuman catch on Friday night to remove New Zealand's best batsman Kane Williamson, diving full length to his right and taking him one handed off Starc.
Cummins made the first breakthrough on Saturday when he removed wicketkeeper-batsman BJ Watling for eight, after he moved one back into him and had him playing on.
Starc's dismissal of Colin de Grandhomme on 23, caught behind off a short ball, was shrouded in controversy.
Third umpire Marais Erasmus couldn't find enough evidence to overturn the on-field call of out, despite replays showing the ball appearing to miss the gloves.
Labuschagne and Lyon mopped up the lower order, with Labuschagne's delivery to bowl Mitchell Santner both dipping and turning.
However, it wasn't a perfect performance for Australia before tea.
They missed an easy run-out opportunity to remove Watling earlier when a Lyon throw bounced on the square, Labuschagne managed to get in the way and Paine fumbled the ball before it reached the wicket.
AAP
