Plans to be unveiled in The Budget to increase the number of skilled migrants allowed to enter regional Australia from 10,000 this year to 16,000 in 2011/12 to cope with the demand of a resources boom are not enough, it is claimed.

Treasurer Wayne Swan wants to increase the skilled migrant intakes under the Regional Sponsored Migration Scheme, whereby employers can sponsor a skilled migrant on the condition they live and work in the area for at least two years.

He is also expected to streamline the administration of the RSMS, allowing local authorities to tailor the scheme to suit their different labour needs. This year, about 10,000 migrants entered Australia on the scheme out of a skilled migrant intake of 113,850.

The mining areas of Western Australia and Queensland are facing an increasing shortage of skilled labour but industry and business groups say that the proposal will make little difference.

Peter McDonald, Australian National University demographer, said this boost would not do a great deal for skills shortage because intake numbers included family and children as well as the workers.

He said about 40% of the skilled migrants in this year's intake of 10,000 would be dependants, and a majority of the remainder of workers would already be in Australia on temporary work visas. This means that if the intake of the scheme was boosted by 6,000, the country might get only about 1,800 new workers.

According to Australian Industry Group chief executive Heather Ridout, the expected boost in skilled migrants was at the lower end of what was needed, given thousands of workers were required to fill the gap. She said the skills shortage in Australia was a long-term threat to sustainable growth and interest rates.

'It's a huge capacity constraint. It will get worse. It will put pressure on rates, so government is right to be nervous, but it has signalled it is willing to take let immigration play a big role and that's a welcome message,' Ridout told The Australian.

Jennifer Westacott, chief executive officer of the Business Council of Australia (BCA) believes that better use should be made of temporary migration visas. 'We believe at least two thirds of the programme should be skills based so that people who come into the country have the skills we need for a stronger, increasingly diverse economy,' she explained.

The BCA has called for a target net migration of at least 180,000 a year. Immigration peaked in 2008 at 315,000 but has fallen back since.

Westacott has also asked the government to make greater use of temporary migration visas, including the 457-visa programme, and the proposed new enterprise migration programme for large investment projects.