PM says 'fair dinkum process' being used to determine migration cut

Prime Minister Scott Morrison says nothing can be done on lowering Australia's immigration cap until next year's budget.

Scott Morrison is backing his "fair dinkum process" to lower the immigration cap in next year's federal budget.

The prime minister has said he expects to cut the annual permanent migration intake by 30,000 places.

"What I announced the other night was a fair dinkum process to actually get the actual level right," Mr Morrison told 2GB radio on Wednesday.

"I do my homework before I make decisions.

"This year's migration program is already set and we'll have to make a decision in next year's budget."

Australia's annual immigration cap stands at 190,000 but only about 162,000 permanent visas were approved last year.

The government is reportedly in line for a similar figure this year.

Immigration Minister David Coleman said the idea to cut migrant numbers made "absolute sense" to prevent more overcrowding in Sydney and Melbourne.

But Mr Coleman said any changes proposed by the government would take into account the need for skilled migrants and the economic benefit they brought.

Immigration Minister David Coleman has backed a cut to the migrant intake. Source: AAP

"At the end of the day, immigration is a recruitment exercise for the country," he told Sky News.

He appeared to flag cuts to the temporary migration program, but not the student intake which formed the biggest part of that scheme.

Population Minister Alan Tudge said migration had been important to Australia's success but the future of Sydney and Melbourne needed to be taken into consideration.

"They are very fast-growing cities, infrastructure hasn't been keeping up and we just need to ease back on that while allowing more people to go to other parts of Australia," Mr Tudge told the Nine Network on Wednesday.

Labor's immigration spokesman Shayne Neumann has called the government's idea a "cheap trick" designed to get a headline.

"(Mr Morrison) locked in Australia's annual permanent migration intake at 190,000 during his time as immigration minister and then as treasurer," Mr Neumann said.

"If he was wrong about that, he should explain why he was wrong."

The Federation of Ethnic Communities' Councils of Australia has criticised the government's idea as "divisive".