Needing just 19 to win after a brilliant early spell by James Pattinson, Hughes managed to get himself dropped in the slips – and then out next ball – to complete a terrible personal performance in an otherwise comprehensive win.
The debate will immediately begin about Hughes’ continual habit of getting out caught behind the wicket – with the apparent lack of technique compounded by terrible shot selection.
If Watson proves his fitness for the Second Test in Hobart starting on Friday, then Hughes' position must be in doubt, despite Dave Warner's failure in the first innings.
Warner hit the winning runs to go with his four catches for the match – which could also have been added to by a wicket with his first ball, if Pattinson had been able to hold on to a diving catch.
It was the only man-of-the-match Pattinson did wrong all day, after he inspired Australia to rout New Zealand for 150 in their second innings.
In the second over of day four, the Test debutant (5-27) was on a hat-trick when he took three wickets in four balls to reduce the Black Caps to 4-17, and the shellshocked visitors never recovered.
The 21-year-old Victorian boasted figures of 5-7 by his seventh over - incredibly his first five-wicket haul in just his 10th first class game.
New Zealand began the day at 1-10 but went to lunch at 7-121.
And they were 8-123 when the stubborn Dean Brownlie (42) was dismissed by Peter Siddle (1-44) on the eighth ball after lunch.
Then Tim Southee (eight) and Chris Martin (zero) were caught slogging off-spinner Nathan Lyon (3-19).
Pattinson led the team off the field to a standing ovation after his heroics.
It marked a big turnaround for Pattinson who was 0-13 after his first Test over on Thursday, finishing with first innings figures of 1-64 off 15 overs.
But not everything he touched turned to gold on Sunday.
He dropped Perth-born Brownlie on 34, denying Warner a wicket with his first ball in Test cricket.
New Zealand took seven off the first over of the day before all hell broke loose.
Martin Guptill (12) was snapped up at bat-pad and two balls later Kane Williamson (0) was caught behind driving - as was captain Ross Taylor (0) next ball.
Jesse Ryder survived the hat-trick ball, jamming out a nasty yorker.
Nightwatchman Doug Bracewell watched from the other end in horror as New Zealand slumped to 5-28 in the 13th over.
Bracewell would not have fancied his odds of surviving considering his rotten luck in Brisbane - he had three chances go down off his bowling in Australia's 427 first dig after dismissing Michael Clarke (139) on a no ball.
Sure enough he was next to go - giving Pattinson five scalps.
The aggressive Ryder (36 off 38) showed some resistance before being caught slogging Lyon.
At 6-69, Brownlie and former skipper Daniel Vettori (17) tried to dig in, putting on 52 before Mike Hussey had the latter caught behind on the stroke of lunch.
with AAP