Peters spoke about the military pact between Australia, the United States and the United Kingdom in an annual 'scene setter' speech at Parliament on Wednesday evening.
It follows the Labour Party inviting AUKUS critics to Parliament for a discussion on the arrangement and New Zealand's possible future involvement last month.
Peters used his speech to address some of the criticism raised at this event and explain exactly where the coalition government stands on Pillar 2 of AUKUS.
He set out the timeline of government involvement; saying officials first started discussing Pillar 2 in September 2021 and ministers first got advice about potential involvement in October 2021.
"In 2023, after almost two years of careful consideration, Labour's Prime Minister, in concert with his Ministers of Foreign Affairs and Defence, sanctioned officials to begin discussions with AUKUS partners about Pillar 2's scope and architecture," Peters said.
"So, let's be clear. Pillar 2 discussions were initiated by Labour, before the current Coalition Government was voted into office. That is why we state we are continuing a process already begun by our predecessor Labour Government."
This was consistent with New Zealand's nuclear-free legislation, Peters said.
He told the crowd of diplomats AUKUS partners wanting New Zealand to participate in Pillar 2 was a "crucial precondition" to any involvement.
"That precondition has not yet been met, which is why we are exploring with our traditional partners the scope of Pillar 2 and seeking a much more detailed understanding of what this involves.
"Indeed, it is not yet fully clear to us what criteria AUKUS partners will use when considering the participation of new countries in Pillar 2."
'Commentators are well ahead of where the government presently sits'
Peters said the government had to carefully examine what New Zealand might be expected to offer - and what it could take - from the pact before making any decisions.
"The government is a long way from this point of being able to make such a decision. But we should emphasise that it would be utterly irresponsible for any government of any stripe to not consider whether collaborating with like-minded partners on advances in technology is in our national interest."
He checked Labour in the speech, accusing it of "close-mindedness in opposition".
"We are disquieted by any potential breakdown in foreign policy bipartisanship over Pillar 2. Bipartisanship in foreign policy is not a luxury for our small state, it's a necessary condition for advancing our sovereign interests effectively, thereby keeping New Zealanders secure and prosperous. We urge them to hold their nerve.
"We also believe, given our information gathering is still in its early stages, that critics and commentators are well ahead of where the government presently sits in relation to Pillar 2."
Much of the political outrage about Pillar 2 came after Peters and United States Secretary of State Antony Blinken met and issued a joint statement in April.
"We share the view that arrangements such as the Quad, AUKUS, and the Indo-Pacific Economic Framework for Prosperity contribute to peace, security, and prosperity in the Indo-Pacific and see powerful reasons for New Zealand engaging practically with them, as and when all parties deem it appropriate," the statement read.
Critics had rejected Pillar 2 outright without "possession of the basic facts", Peters said.
"They can paint the darkest picture of Pillar 2 and make ignorant assertions about the nature of the strategic environment, liberated by not knowing what they don't know.
"The coalition government, in contrast, is constrained in its ability to properly respond to such ignorance because of what we do know but can't say to safeguard the conduct of our foreign policy."
Intelligence was never perfect which was why ministers had responsibility for making decisions on foreign, defence and national security policy, he said.
