Population overhaul to save 'dying' towns

Home Affairs Minister Peter Dutton hopes a major overhaul of population policy will help save "dying" country towns.

The federal government this week announced plans to limit Australia's permanent migrant intake to 160,000 for each of the next four years.

Mr Dutton described the reduction of 30,000 places each year as "common sense".

"Hopefully it will release a bit of pressure from congestion, accommodation and all of the other services in the capital cities," he told 2GB radio on Thursday.

The government is also introducing new visa categories that will force 23,000 skilled migrants to spend three years in regional towns before applying for permanent residency.

There are currently 47,000 unfilled jobs across rural and remote communities, in places like farms and abattoirs.

"Some of these small towns are dying," Mr Dutton said.

Prime Minister Scott Morrison said Australia had benefited from immigration, but cities like Sydney and Melbourne had experienced "growing pains".

Mr Morrison is confident slashing the annual migrant intake won't deliver a blow to the federal budget.

The new ceiling has been chosen as it's the lowest annual migration intake that won't be detrimental to the nation's balance sheet.

Immigration Minister David Coleman is confident workers will comply with the new visa requirements, as existing state-sponsored regional visas have a 99 per cent compliance rate.

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.

While Mr Shorten said the government policy was "smoke and mirrors", he agreed with the prime minister about failing road and rail infrastructure.

But he argued real changes must involve an overhaul of temporary work visas, which he believes undermine wages and working conditions.