Home Affairs Minister Clare O'Neil says Australia's migration system is "broken" and "backwards" and is in desperate need of a fundamental overhaul and a "radical simplification". 

Ms O'Neil has lamented the "staggering shift" away from permanent migration towards a focus on "temporariness", which she said was a result of negligence and a lack of planning and strategy over many years.

"Our migration system has been on continental drift for a decade," she told an AFR workforce summit in Sydney.

"Australia's migration system is broken, it is unstrategic, it is complex, expensive, it's slow.

"It's not delivering for business, it's not delivering for migrants and it's not delivering for the nation."

Ms O'Neil said structural reform "very significant in size and scope" was needed to rebalance temporary and permanent migration programs and fix the complex administration system that makes Australia an "unattractive destination" for would-be migrants.

"Highly-valued migrants that the world is fighting for today, face bureaucratic delay coming to Australia, and the red carpet treatment migrating elsewhere," she said.

"We just can't let that continue. And our government doesn't intend to.

"We've got to simplify those arcane rules and reduce complexity, no more spaghetti diagrams."

Net migration played a crucial role in Australia growing its economy and avoiding a recession for almost 30 years.

But net skilled permanent migration to Australia has plateaued at about 30,000 a year in the past two decades, while the number people on a temporary basis had grown to 1.9 million migrants today.

"We have the system pretty much exactly backwards," she said.

"It is relatively easy for a low-skilled, temporary migrant to come to Australia, but difficult, slow and not particularly attractive for high-skilled permanent migrants who come here.

"This reliance on temporary migration that we have today is having enormous social and economic consequences for the country."

Priorities to overhaul migration programs

Ms O'Neil said the government was considering "eight big changes" that would drive a new model for migration that will be underpinned by a "clear definition of why the migration system exists".

She said the planned changes did not "necessarily mean more migrants coming" but work with state governments would be required to coordinate infrastructure and housing needs and deliver skills to regional areas and small business.

The government would need to get better at "actively selling" Australia to migrants and tapping into the potential of international students, she argued, rather than "sitting back and seeing who chooses us".

"We need to better coordinate and integrate the needs of the Labor market, the training system and the education system and the migration system," Ms O'Neil said.

"We need to unlock migrant potential, part of this will be improving the speed and ease with which we recognise migrants' existing skills when they arrive and trying to help provide a bit of support to assist them in translating the skills of a secondary applicant."

In November last year, the government commissioned a review into migration, which is being led by former secretary of the Department of Prime Minister and Cabinet, Martin Parkinson.

Ms O'Neil said she wanted an "architecture document" complete by April, based on Dr Parkinson's review, which would guide "concentrated" consultation before final decisions could be made and implemented.