Federal Treasurer Josh Frydenberg has poured cold water on the NSW premier's call to halve her state's immigration intake, saying Australia is a "proud migrant nation".
Gladys Berejiklian wants to halve the number of overseas migrants entering her state and thinks state and territory leaders deserve a seat at the table when the federal government draws up immigration policies.
But Mr Frydenberg said while the federal government was willing to help alleviate population strain through investing in services and infrastructure, cutting the immigration rate further wasn't on the radar.
"What I would say to Gladys Berejiklian is we stand ready to work with you to invest in the necessary infrastructure to ensure that this great state of NSW has the right services and the right infrastructure to support the population that it has," Mr Frydenberg told reporters in Sydney.
"The number of permanent visas have come down quite significantly; we are a very proud migrant nation."
Ms Berejiklian was responding to a federal proposal to force new arrivals to live in regional areas for up to five years rather than immediately settle in Sydney and Melbourne.
"My government is building more roads and rail, schools and hospitals than ever before in our state," she told the Nine Network on Wednesday.
"We are playing catch up and we do need to take a breather to make sure we have that infrastructure in place, to make sure our infrastructure growth is sustainable."
The premier suggested a return to Howard-era immigration levels of around 45,000 per year compared to the around 100,000 today.
Ms Berejiklian said she was pleased Prime Minister Scott Morrison had invited the states and territories to share their views on the matter.
"The states have never had a voice when it comes to immigration and population policy and I think that needs to change," she said.
"The states are the ones that need to build the infrastructure to make sure we can handle a sustainable population."
As the daughter of Armenian migrants herself, the premier moved to assure the public she wanted to keep the state a beacon of multiculturalism, and said immigration figures could be revised upwards in the future.
Mr Morrison said NSW had requested an additional 5000 migrants in the current planning year and offered to dovetail federal migration plans to other states but warned it didn't mean the state will be given "a leave pass on dealing with the pressures of population".
"The infrastructure has to get built and it has to be done efficiently and it has to be done in a timely way," he said.