His plan would see 6,000 people cut from the current quota.
The Opposition leader says his plan is also about deterring people smugglers.
Tony Abbott is speaking here to chief political correspondent Sabra Lane.
Correspondent: Sabra Lane
Speaker: Tony Abbott, Australian Opposition leader
TONY ABBOTT: We think that with the borders out of control as they are, this is the last message that we should be sending to the people smugglers and their customers, that we are making it easier for people to come.
And we've also got an out of control budget as well as out of control borders and by not increasing the intake in this way, we would save on the Government's own figures something like $1.3 billion a year over the forward estimate.
SABRA LANE: To be fair here, the humanitarian intake, those numbers are for the people who are waiting in UNHCR (United Nations High Commissioner for Refugees) camps overseas who, as some on your side would say, those who are waiting in the queue. So you're denying those people access to Australia?
TONY ABBOTT: But under this Government those positions are increasingly being filled by the people who are coming to this country illegally by boat.
And the last thing we should be doing at this time Sabra is sending the wrong message to the people smugglers and their clients. We need to send the strongest possible message to the people smugglers and their clients that the game is up, we will not be dictated to by criminals. We will not allow ourselves to be played for mugs by people smugglers.
SABRA LANE: But you are now sending a very strong signal to those people waiting in those camps offshore, UNHCR camps, that Australia is cutting the numbers that even if you wait now you are going to have to wait even longer.
TONY ABBOTT: Well, we've also said that something like 11,000 of the 13,750 positions will be kept for people who come the right way, not the wrong way.
So what we're trying to say is that we will always be a generous and a welcoming country provided you play by our rules, you don't try to break the rules, provided you come in the front door, you don't try to walk in the back door.
SABRA LANE: The Coalition is also proposing a scheme of mutual obligation for those on bridging visas. That's pretty similar isn't it to the policy that you took to the 2010 election?
TONY ABBOTT: Yes, it is. And the general mindset that we have is that we want to break the something for nothing mentality. Now if it's right and proper for young Australians to be working for the dole, surely it's even more right and proper for people who have come illegally to our country to be pulling their weight.
Now I think it's very, very important that there be no free ride. There certainly shouldn't be a free ride for people who have come uninvited to our country.
SABRA LANE: Is the Coalition party room entirely behind this?
TONY ABBOTT: Look, this is a matter which has gone through the leadership group. But as you say Sabra, it's very similar to policies that we've taken to the last election and I'm confident that it would have the overwhelming support of my colleagues.
SABRA LANE: So you're yet to put it to the Coalition party room?
TONY ABBOTT: Look, as you know, from time to time on both sides of politics, party leaders after consulting their senior colleagues will announce a position that is designed to respond to matters that have come up.
Now I don't think the Prime Minister put to the caucus her latest back-flip on border protection policy, but I've certainly taken this to my leadership colleagues.
SABRA LANE: Certainly there are some MPs here who believe that the policy announce this week of onshore processing, with putting people on bridging visas will create a new underclass. Do you believe that as well, that this will create a system, a second class system for some people in Australia now?
TONY ABBOTT: Look, the Government is making it up as it goes. That's the problem.
And the point that I've been making is that the worst possible preparation for life in Australia is five years on welfare. So it's saying to the people smugglers and their customers, if you get to Australia you'll eventually get what you want - namely permanent residency and ultimately Australian citizenship - but you'll be sitting on the dole for five years first. Well, what kind of a preparation for life in Australia is that?
SABRA LANE: That payment though works out to be something like $217 a week. It would be pretty hard wouldn't it, to live, to pay rent, to buy food, to live on $217 a week?
TONY ABBOTT: I accept that but the point I'm making is that there shouldn't be a something for nothing mindset. And if we are trying to break that amongst the Australian people generally all the more important that we don't allow it to gain a footing amongst people who are coming to this country uninvited.