Prime Minister Scott Morrison is confident that limiting new migrants to Australia to 160,000 for each of the next for years won't come as a blow to the federal budget.
In fact, that number has been chosen as it's the lowest annual migration intake that won't be detrimental to the nation's balance sheet.
"If we were to take the figure below 160,000 that would have had a direct fiscal impact on the budget," Mr Morrison told reporters in Canberra on Wednesday.
The federal government is reducing the number of annually available immigration places from 190,000 to 160,000 as it tries to ease pressure on road and rail networks in the country's biggest cities.
An intake figure below 160,000 would've had a direct fiscal impact on the budget, Mr Morrison says. Source: AAP
It's also introducing fresh visa categories to force 23,000 skilled migrants to spend three years working in regional towns before applying for permanent residency.
Immigration Minister David Coleman is confident those workers will comply with their visa requirements, as existing state-sponsored regional visas have a 99 per cent compliance rate.
"Permanent residency is top of the list in terms of the incentives for people. We certainly expect that these will be well subscribed and that there will be a very high level of compliance," he said.
International students will also be given enticements to study outside the capitals, including an extra year of Australian work rights if they graduate from regional universities.
Labor leader Bill Shorten on Tuesday said he was "fine" with the cap but on Wednesday said his party would look at it.
Prime Minister Scott Morrison and David Coleman, Minister for Immigration, Citizenship and Multicultural Affairs. Source: AAP Image/Andrew Taylor
While Mr Shorten said the government policy was "smoke and mirrors", he agreed with Mr Morrison about failing infrastructure.
But he said real reform would involve an overhaul of temporary work visas which undermined living conditions and wages.
Opposition Leader Bill Shorten. Source: AAP
