Coalition will introduce new skilled worker visas that require three years’ residence in regions as a pre-condition for permanent residency

The Morrison government will cap permanent migration at 160,000 for the next four years, and introduce new skilled worker visas, covering 23,000 entrants, requiring three years’ residence in the regions as a pre-condition for securing permanent residency.

Morrison will on Wednesday unveil his government’s much telegraphed population policy, which will include a permanent migration intake very similar to last year’s and the introduction of two new regional visas for skilled workers.

With the recent increase in net overseas migration driven in substantial part by the lucrative international student market, the government will also offer scholarships to try and encourage foreign students to study outside the cities, at regional universities.

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There will be 1,000 scholarships, worth $15,000, available to locals and overseas students. Overseas students undertaking their studies at regional universities will also be able to access an additional year in Australia on a post-study work visa.

During the 2017-18 intake of 111,000 skilled migrants, 8,500 of the cohort were granted a visa that required two years’ residency in a regional area before becoming eligible for permanent residency. Wednesday’s policy shift will apply those terms to a larger group and add another year of residency to the criteria.

With voters irritated by congestion in the big cities, and migration looming as a proxy issue for voter frustration about governments failing to plan, the Coalition has been flagging the population policy reboot for more than 12 months, with Morrison telegraphing publicly last November the intake would be lower.

While the government will lower the cap, as telegraphed, from 190,000 to 160,000, in practical terms, Wednesday’s shift actually delivers close to status quo. Australia accepted 162,417 permanent migrants in the past year, which was a decrease of more than 10% on the previous year.

Business has been critical of the reduction. The chief executive of the Australian Chamber of Commerce and Industry, James Pearson, described the policy shift as “an economic own goal”.

A concerted push to lower the cap has been underway within government ranks for much of the past 12 months, led by Peter Dutton and Tony Abbott, and resisted at times by Morrison before he took the leadership from Malcolm Turnbull.

When Abbott last February advocated a revised target of 110,000 migrants a year, Morrison, then treasurer, warned a substantial cut would increase the budget deficit by billions. The government says the revised cap of 160,000 has no fiscal impact.

The timing of Wednesday’s announcement is awkward for the government, which has faced a rolling backlash about its rhetoric on race and asylum seekers in the wake of the Christchurch attacks.

Morrison referenced that awkwardness explicitly on Tuesday, and attempted to inoculate the government against further criticism. He declared that population was a practical issue and should not “be hijacked by other debates about race or about tolerance or these other issues”.

The prime minister said he rejected absolutely “any effort to try and recast those important practical issues for Australians, in the context of other matters, which only seek to divide”.

While the timing will doubtless fuel the critique about the Coalition federally, clarifying the policy is considered helpful politically to the New South Wales Liberal premier, Gladys Berejiklian, who faces the voters on Saturday, and favours lowering the rate.

The Labor leader, Bill Shorten, while declaring on Tuesday that “dog-whistling” about immigration in Australian politics needed to stop, nonetheless embraced Morrison’s new cap. He noted the government was, in practical terms, presiding over a 1% cut to the current intake. “That’s fine,” Shorten said. “I’ll always be guided by the experts”.

The government says people entering Australia under the new regional visas will be given priority processing and will have access to a larger pool of eligible jobs.

Ahead of Wednesday’s announcement, the government said extra resources for enforcement and compliance arrangements would be rolled out to ensure people remain in regional Australia as their visa requires, but there weren’t specific details.

If people breach the conditions of their visas by relocating to cities, they will be ineligible for permanent residency and “risk cancellation and removal from Australia”, according to briefing materials.

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In advance of Wednesday’s announcement, Morrison, pointing to the government’s investments in infrastructure to ease congestion in cities, said he wanted Australians “to spend less time in traffic and more time with their families [and] are being able to get on site or get to work sooner and safer”.

“Meanwhile I know we have rural and regional communities that have plans and opportunities to grow their shires, who are looking for more people to come and settle in their districts, to fill jobs, inject more life into their towns and shore up the important education and health services for the future they rely on,” Morrison said.

“This is not a challenge our government is shying away from. It is our job to have a plan for managing Australia’s future population. And we are getting on with this job.”