The Morrison government has confirmed it will not sign up to the United Nation’s migration pact, claiming it will undermine Australia’s harsh policies to deter asylum seekers despite Australia’s role in helping to draft it.

The Refugee Council of Australia and advocates have strongly rejected the government’s claim, citing the fact the compact is non-binding and has a provision stating that countries retain sovereignty over their migration programs.

Labor offered a mixed reaction to the announcement, with defence spokesman Richard Marles suggesting Labor would “work with the global community” on migration, while opposition leader Bill Shorten said he was “not fussed” about the decision and would decide after taking advice in government.

In July the Coalition signalled it would refuse to sign the agreement, because the final draft of the compact said that migration detention should only be used “as a measure of last resort” and states should work towards alternatives.

After failing to secure changes addressing its concerns, the Morrison government confirmed on Wednesday that Australia will not sign, joining the United States, Israel and a group of Eastern European countries that have also refused.

The announcement comes after Scott Morrison signalled that Australia will reduce its migration cap from 190,000, all but confirming on Wednesday the 2019 budget will reduce the cap.

The global compact aims to address migration issues in a “safe, orderly and regular” way through a “collective commitment to improving cooperation on international migration”.

The final draft includes a commitment to review legislation and policies to ensure “migrants are not detained arbitrarily, that decisions to detain are based on law, are proportionate, have a legitimate purpose, and are taken on an individual basis, in full compliance with due process and procedural safeguards, and that immigration detention is not promoted as a deterrent or used as a form of cruel, inhumane or degrading treatment to migrants, in accordance with international human rights law”.

It states that refugees and migrants “are entitled to the same universal human rights and fundamental freedoms, which must be respected, protected and fulfilled at all times”.

The compact nevertheless “reaffirms the sovereign right of states to determine their national migration policy … in conformity with international law”.

Australia runs offshore detention facilities on Manus Island and Nauru designed to deter people from coming to Australia by boat to claim asylum and turns back boats at sea, a practice the UN has said is illegal under international law and “may intentionally put lives at risk”.

In a joint statement prime minister Scott Morrison, home affairs minister Peter Dutton and foreign affairs minister Marise Payne said the government believed the compact is “inconsistent with our well-established policies and not in Australia’s interest”.

The trio said Australia “already achieves” the goals of safe, orderly and regular migration and the compact would “directly conflict with important principles that have underpinned our successful approach”.

They warned the compact would “risk encouraging illegal entry to Australia and reverse Australia’s hard-won successes in combating the people-smuggling trade”.

“The compact fails to adequately distinguish between people who enter Australia illegally and those who come to Australia the right way, particularly with respect to the provision of welfare and other benefits.”

Refugee Council of Australia chief executive Paul Power said the compact recognised both the rights of migrants and the right of sovereign states to set their own policy.

He noted that the Australian government had “been very active, having considerable influence over the wording of the global compact”.

“In refusing to sign the compact, Australia will join a small group of governments which are each trying to appeal to or appease minority far-right political movements within their countries,” Power said.

“It is hard to see the Australian government’s decision as anything other than posturing for some political gain, as the facts do not align with the prime minister’s claims.”

Carolina Gottardo, the director of Jesuit Refugee Service Australia who participated in negotiations of the compact as a member of the Asia Pacific Refugee Rights Network, told Guardian Australia that Australia helped water down the compact.

Gottardo accused the Morrison government of “misinformation” and a “political game” for having argued for stronger protections of sovereignty, only to refuse to sign the non-binding compact on the grounds it harmed sovereignty.

“The final compact is a major achievement, it is measured and constructive.

“It’s a non-binding agreement of great normative importance that does not threaten border protection or efforts to stop people smuggling.”

Save the Children director of policy and international programs Mat Tinkler called on the government to “work toward global solutions” to the migration crisis.

Dutton told Sky News that the Coalition government had “stopped drownings at sea and boat arrivals”.

“And we’re not going to surrender that – we want our sovereignty to stay intact,” he said.

“We’re concerned about the way in which [the compact] might be interpreted by the courts here.

“We’re concerned about whether or not it starves us … of the ability to decide the way in which we can return people. Under the compact certain obligations could be imposed where we needed to support people once they’d been returned to a country of origin.”

Both Morrison and Dutton ruled out Australia withdrawing from a separate UN refugee compact.

Morrison told 2GB Radio the government had announced “a fair-dinkum process” to review Australia’s migration levels in consultation with the states and territories.

“The migration program is set a year in advance,” he said. “This year’s program is already set.

“We’re going to have to make a decision in next year’s budget for the program that follows that.”

Australia accepted just 162,417 permanent migrants in the past year, a figure which is already almost 30,000 a year below the current cap.