Population and migration policy will be top of the agenda when Prime Minister Scott Morrison meets with state leaders in Adelaide on Wednesday.
State and territory leaders will sit down with Mr Morrison as part of the Council of Australian Governments (COAG) meeting, Australia's peak intergovernmental forum.
Mr Morrison has been flagging an overhaul of population policy since he took over as prime minister, appointing Alan Tudge as a new population minister.
He wants to move to a system where states and territories would set annual migration caps and be expected to demonstrate they have adequate infrastructure plans.
Mr Morrison has previously said the federal government would “always” set the overall cap on permanent immigration – set around 190,000 – but the states should play a more active role.
"In a state like South Australia, you want more people. In Adelaide you want more people. In states like New South Wales and Victoria, we need to manage that growth because the congestion impacts in Melbourne and in Sydney are affecting the quality of life for our citizens and residents in those cities," Mr Morrison said ahead of the meeting.
He said the states needed to "work closely with the Commonwealth" to ensure migrants were settling in places with strong demand, and not places where "we're hitting our head on the ceiling".
The shift comes in response to concerns over congestion in Sydney and Melbourne, while smaller states have been requesting more skilled migration to boost jobs.
NSW Liberal premier Gladys Berejiklian has called for a massive 50 per cent reduction in migration to her state, and will tell the COAG meeting she wants to arrest "ballooning" population growth.
Reports suggest Ms Berejiklian will propose "incentives" to get more international students to study at regional NSW universities, instead of the big Sydney unis.
Abul Rizvi, a former deputy secretary at the Immigration department, told SBS News international students were a major driver of congestion in cities - more so than permanent skilled and family migrants.
NSW Premier Gladys Berejiklian said she would consider implementing pill testing if her government was shown evidence it saved lives. Source: AAP
Ahead of the meeting the Australian Chamber of Commerce and Industry, a leading business group, released a statement defending the economic contribution of migrants and urging governments not to use them as a scapegoat for poor infrastructure planning.
