Meanwhile, those rated below New Zealand included Iceland, Bolivia, Ecuador, Poland, Switzerland, Vietnam and Japan.
Richard Jackson of the National Centre for Peace and Conflict Studies at the University of Otago said the report seemed "pretty ridiculous".
"And I think most terrorism experts and serious scholars that I know would laugh their heads off."
Professor Jackson, also the founding editor and current editor-in-chief of the journal Critical Studies on Terrorism, said it was difficult to see what evidence the rankings were based on.
"It's hard to see how they came up with a scheme where Australia was ranked as a high threat in the same category as Libya, which hasn't got a functioning government and has got armed militias everywhere and Isis is in there."
He believed the report was a "knee-jerk reaction" to last week's attack in Tunisia.
As for New Zealand's terror rating, Professor Jackson said it could only be because of our involvement in Iraq.
"On the basis of evidence of previous attacks, number of people convicted of terrorism offences in the courts, the number of ongoing investigations by police, the number of reported incidents to police ... by all that evidence it's incomprehensible the way in which they've done this.
"New Zealand's had one casualty from terrorism and that was when the French attacked the Rainbow Warrior."
Last year, New Zealand's national threat level went from "very low" to "low".
Prime Minister John Key said at the time that the change meant "where previously the threat of a terrorist attack was assessed as unlikely, it is now assessed as possible but not expected".
Today a spokesman for the New Zealand Intelligence Community (NZIC) said the Combined Threat Assessment Group, which determines the domestic terrorism threat level, considers threats to the safety and security of New Zealand and New Zealanders.
"Our domestic terrorism threat level does take into account world events as well as the domestic situation, and is under continuous review."
