Australia's immigration minister was accused of xenophobia Wednesday after he said increasing the nation's refugee intake would lead to "illiterate and innumerate" people claiming welfare or taking local jobs.

Peter Dutton was responding to proposals by the Labor opposition to boost Australia's annual refugee intake from 13,750 to 27,000 while the Greens want it raised to 50,000 as they outline policies ahead of national elections on July 2.

"For many people they won't be numerate or literate in their own language let alone English and this is a difficulty," Dutton told Sky News late Tuesday.

"Now, these people would be taking Australian jobs, there's no question about that.

"And for many of them they would be unemployed, they would languish in unemployment queues and on Medicare and the rest of it. So there would be a huge cost and there's no sense in sugarcoating that."

Labor frontbencher Chris Bowen, a former immigration minister, said the country had benefited hugely from the contribution of refugees over the years and criticised Dutton's comments.

"There are hundreds of thousands of refugees in Australia who've worked hard, who've educated themselves and their children and they will be shaking their heads at their minister today, in disgust frankly," he told reporters.

"If Peter Dutton owes anybody an apology it's not the Labor Party, it's them."

Greens immigration spokeswoman Sarah Hanson-Young went further, accusing Dutton of xenophobia.

"These are vile and nasty (comments) and what it does is it exposes the Liberal Party's current thinking on people who come to our country seeking protection," she said.

"Peter Dutton says people are either going to steal Australian jobs or be waiting in the dole queue. Which one is it? It is nasty and steeped purely in xenophobia."

But Dutton won support from Foreign Minister Julie Bishop who said he was only being realistic about the cost of resettling even more refugees.

"Peter Dutton is pointing out the very real cost involved in issuing humanitarian and refugee visas," she said.

"Often the people who come to Australia on these visas are from very troubled backgrounds -- particularly from Afghanistan but also Pakistan and beyond -- and there is an extremely high cost involved in ensuring they be a contributing member of society.

"Let's have a reality check here."

While Canberra has a hard-line policy on asylum-seekers arriving by boat, sending them to Pacific island camps and refusing to settle them in Australia, it agreed last September to a special intake of an additional 12,000 refugees from the Syria-Iraq conflict.

It is also gradually lifting its annual refugee intake -- to 16,250 in 2017–18 and to 18,750 the following year.