Bird has a solid test average of 23.30 to his name from three matches, and was man-of-the-match against Sri Lanka at the SCG back in early 2013.
The 29-year-old has not had a look in since an unsuccessful cameo in the Ashes tour of that same year, but Smith said the Tasmanian would be an effective weapon alongside Josh Hazlewood and Peter Siddle.
"The selectors aren't 100 per cent sure whether (Pattinson) would get through this first test match so that decision was made," said Smith.
"I think Jackson Bird has been bowling extremely well. I saw him for the first time yesterday in the nets and I thought he bowled extremely well. I'm really happy with the XI we've picked and hopefully we can have a successful week.
"He's still quite young and I think he's been a quality bowler. He's always performed really well at Shield level and I think it's great that he gets another opportunity.
"I saw him bowl yesterday and I think he's bowling with quite good pace. He's hitting a good area and he's swinging the ball and swinging it late which is a great attribute to have and if he gets the ball in the right areas in this test match I think he can do a bit of damage.
"He runs in all day, he's quite tall so he hits the bat a bit higher than what you think and he generally hits good areas.
"I think that's really important for us in this test series particularly if the wickets are going to do a little bit. If we're hitting good areas we're going to create a lot of chances and I think he can do that for us."
Australia have stuck with the same top seven that swept the West Indies at the SCG in early January, with Nathan Lyon as the spinner.
New Zealand have elected to go with veteran Doug Bracewell over the in-form Matt Henry in their bowling attack, while Corey Anderson and debutant Henry Nicholls will form a new-look middle-order to the one the Black Caps brought to Australia.
Australia: Joe Burns, David Warner, Usman Khawaja, Steve Smith (c), Adam Voges, Mitch Marsh, Peter Nevill, Peter Siddle, Josh Hazlewood, Nathan Lyon, Jackson Bird.
New Zealand: Brendon McCullum (c), Martin Guptill, Tom Latham, Kane Williamson, Henry Nicholls, Corey Anderson, BJ Watling or Luke Ronchi, Mark Craig, Doug Bracewell, Tim Southee, Matt Henry, Neil Wagner, Trent Boult.
- AAP