Five-star Josh Hazlewood dampens New Zealand's milestone celebrations
Australia, who won the toss and elected to field, were 124 for four at stumps at Hagley Oval, with Marnus Labuschagne 45 not out and nightwatchman Nathan Lyon on one run, having whittled New Zealand's lead to 38 runs.
Hazlewood's long-time pace comrade Mitchell Starc took three wickets to move past Dennis Lillee's 355 victims and be fourth on Australia's all-time bowling list, behind only Shane Warne (708), Glenn McGrath (563) and team mate Lyon (527).
New Zealand paceman Matt Henry capped a manic day on which 14 wickets fell by taking 3-39 to give the hosts some hope of mitigating the damage wrought earlier.
"I think the way we started off the ball ... we could create some pressure from both ends," Henry said.
"Taking wickets is key out here .... Obviously tomorrow morning's going to be a big start for us and hopefully we can bowl well."
New Zealand captain Tim Southee and Kane Williamson marked their 100th tests, enjoying a warm ovation from the sell-out crowd on a glorious morning - but Australia's bowlers soon muted the celebrations.
Hazlewood trapped Williamson lbw for 17 and proved a constant menace with his suffocating line and length after openers Tom Latham and Will Young survived the first hour with wickets intact.
Left-arm swing merchant Starc got the ball rolling for Australia by having Young caught for 14 straight after the morning drinks break, with Mitchell Marsh diving to his left to take a brilliant low catch and break the 47-run partnership.
Hazlewood then struck twice before lunch, having Latham caught behind for 38 and twitchy number four Rachin Ravindra pouched in the slips for four.
There was no let-up after the break as Hazlewood knocked over Daryl Mitchell (four) and Williamson in quick succession, the former undone by a brilliant, shorter ball that nipped off the seam, reared up and took an outside edge on the way through to wicketkeeper Alex Carey.
A tough start descended into farce as New Zealand lost three wickets for no run to slump to 107 for eight, with Starc having Glenn Phillips caught down the leg-side for two and tailender Scott Kuggeleijn out lbw in successive balls.
Two balls later, Blundell emulated Phillips with another demoralising leg-side dismissal to be out for 22 trying to pull Cameron Green.
It took a lusty 55-run partnership by tailenders Henry and Southee to push New Zealand past 150 before Hazlewood and Cummins wrapped up proceedings.
New Zealand's debutant paceman Ben Sears enjoyed a special moment, having Steve Smith out lbw for 11 with his third ball when the opener failed to play a shot.
Henry bowled Usman Khawaja for 16 and Green for 25, with Travis Head his third victim for 21 when he bottom-edged to be caught behind.
Labuschagne shrugged off a dire run of form to survive and ensure Australia finished the day in charge.