Ross Taylor accepts Australia are in a dominant position after three days of the first Test, yet the New Zealand captain is hoping the Black Caps' spirit can save them in Perth.

Eleven wickets fell on day three as Australia - 167-6 at stumps in their second innings - took a 417-run lead to establish firm control of the day-night encounter.

The Black Caps began the day on 109-5, with Taylor unbeaten on 66, but they were all out for 166 before lunch.

Australia were then 131-1 second time around, but Tim Southee (4-63) and Neil Wagner (2-40) helped stage a fightback to leave the home side six wickets down, and Taylor believes New Zealand will take heart from their display in the final session.

"There's still a long way to go in this Test match, but I thought the fight that we showed as a team, especially in that last session, bodes well for the rest of the series," Taylor told reporters.

"We're a long way behind the game at the moment, but if we can show the fight that we've shown in the last series, I think it will give the team a lot of confidence coming over here."

Taylor went on to add: "Any time you're going to chase 350, 400 on a wearing wicket, it's going to be tough.

"But at the same time we'll see what Australia do tomorrow and hopefully we can take that [declaration] out of their hands and wrap it up.

"Throughout the last few years, the strength of this side is the fighting spirit. Regardless of what happens, we want to fight and fight right to the end.

"It's a strange game, cricket, and the way Australia bowled at us in the first innings - they bowled fantastically well. But it's a time for us to step up as a batting unit and show what we can do. Not only showing what we can do but getting our confidence up as well."

When New Zealand bat again, they will do so knowing Australia are a bowler light after it was confirmed Josh Hazlewood will not bowl for the remainder of the Test due to a hamstring injury.

That did not seem to bother Australia first time around, though, and opener Joe Burns is keen for the hosts not to give their opponents a chance of a recovery on day four.

"Good position to be in," Burns said. "Obviously it's still going to be tough, being a bowler down, but we're really happy with where we're at.

"A little bit disappointing to lose a few wickets tonight but in the grand scheme of the game, we're in a good position, in control of the game. Come out tomorrow, start well and keep driving it home."