It depends on the context. Would you rather be 2nd largest producer of automobiles or 1st largest producer of horse buggies ?
Why can't Pakistan-Australia relations be independent of India ?
Automobiles is one thing. Geopolitics is another.
Maybe in automobiles, its better to be 2nd biggest producer. It is an absolute quantity.
But in geopolitics, it is always a bad thing to be playing 2nd place to anyone. Geopolitics is not a quantifiable or measurable quantity like automobiles. Volatility is a huge negative in geopolitics.
If Volkswagen is 2nd biggest car manufacturer, they will probably be the 2nd biggest car manufacturer for a while and things are not going to rapidly change overnight. Volkswagen CEO can go to sleep at night knowing that when he wakes up in the morning, it is very likely that Volkswagen will probably still be the 2nd biggest car manufacturer and nothing will have changed overnight.
Geopolitics is the complete opposite, you could wake up one morning and be in the middle of a crisis over some political dispute that happened in the middle of the night.
Being #1 like in mass produced automobiles is not important since measurable positions stay pretty consistent over a long period of time and is very predictable. However in non-predictable or non-measurable positions like geopolitics, you have no clue where you will end up the next day, so it is very important to be #1 if possible, since you will need all the support you can get in a major crisis. Being 2nd place is not acceptable, especially if the 1st place guy is your enemy, because he will use his 1st place position to keep you down, and that country will listen to 1st place that is your enemy before he listens to you in 2nd place.
This is why it is better to be 1st in a small country than 2nd in a big country. 2nd place of a big country can never counter 1st place in the same country since 1st gets priority, but even 1st place of a different country can counter 1st place of a big country.
Pakistan will have much stronger leverage against India by being #1 in New Zealand and Indonesia than being #2 in Australia.
Australia can chose to ignore Pakistan if it is #2 within Australia, but if Pakistan is number #1 in New Zealand, it will have the favor of NZ gov't over India within NZ, and NZ gov't has much stronger lobbying directly in Australia than Pakistan and it is harder for India and Australia to ignore.
Basically making NZ and Indonesia a strong friend of Pakistan is a better move than being in the shadow of India in Australia.