Existing regional visas only divert around 5,000 of the annual permanent intake, which is capped at 190,000 places.
The new scheme would be much more ambitious and could force nearly half of the migration stream to settle in regional areas and the smaller states.
Mr Tudge said the policy would not impact the 25 percent who come on employer-sponsored visas, where a specific company vouches for the migrant, or the roughly 30 percent who come on family reunion visas.
“But about 45 percent of our visas aren’t attached to a geographical location as such, and therefore there are those opportunities to provide those incentives and encouragements to reside elsewhere,” Mr Tudge said.
The visas would require migrants to live outside the major cities for "at least a few years", he said, using a “combination of encouragement and some conditions”.
The government’s proposal relates to skilled visas, but Mr Tudge said there was an ongoing discussion about moving more of the humanitarian refugee intake to rural areas as well.
The minister would not specify what punishments might apply to migrants who breach their conditions, or how long the conditions would be imposed.
“Nearly every visa has some conditions attached to it,” he said, flagging more detail in the coming "months".
The former head of the Australian Border Force, Roman Quadvlieg, questioned how the policy would be enforced.
Mr Quadvlieg, who was sacked for misconduct in March and has since been vocal in criticising the government's moves in the migration space, said it would be impossible to "police" the visa rules without "substantial resources".
Border Force is the agency that enforces existing visa rules.
Migrants in the bush
There are already several visas designed to bring migrants to regional areas, but Home Affairs data shows one in 10 who come on such schemes choose to leave for a city within 18 months.
The country welcomed 4,766 skilled workers to regional areas in 2016-17, but almost half settled in Perth. The government removed Perth as a “regional” destination in November but Darwin, Adelaide, Canberra and Hobart remain eligible.
Under some of the other population measures, Canberra will work with the states to implement new infrastructure planning and population controls to claw back some of the $25 billion year in lost economic activity due to city congestion.
A new $1 billion pool of federal money, which the government is calling a 'congestion-busting fund', will be set up to fix local traffic "hotspots".
Centuries of experience
Labor's shadow employment minister Brendan O'Connor said Mr Morrison was a "hypocrite" because he had failed to protect Australian jobs from temporary foreign workers.
He said there were "too many" international students and working holidaymakers, who do get limited work rights, who were exploiting the system and were actually just coming to work.
A Shorten government would set up a new independent body, he said, to investigate which industries had true labour shortages.
The Migration Council has previously questioned Labor's claim that international students often work in breach of their conditions. They said the level of non-compliance was not "particularly high".
The opposition also points to examples of Mr Morrison rubbishing ideas similar to his new proposal back when Labor was in government.
In 2011, Mr Morrison said Labor was making "unrealistic promises that all of this can be turned around by everybody moving to regional areas".
"We simply know, through centuries of migration experience, that that simply isn't how it happens," he said at the time.
The magic number
Asked if Australia should set a population target, Mr Tudge said there was no need to set “an exact number”.
He said there needed to be “controlled population growth” and flagged future announcements on high-speed train lines “early next year”.
Where Are You Really From? S1 Ep3