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Scott Morrison wants home quarantine to become the norm, even as his government stumps up cash for three dedicated isolation hubs.
The prime minister has labelled South Australia's trial of home quarantine a model for the rest of the country once 80 per cent of over-16s are fully vaccinated.
He wants quarantine facilities to be reserved for international arrivals, such as students and workers, rather than returning Australians.
"The answer for quarantine going forward is actually home quarantine," Mr Morrison told 4BC radio on Tuesday.
"I want to see home quarantine become the norm."
Mr Morrison flagged countries with high vaccination rates such as the UK and Japan could be the first to join travel bubbles when Australia reached sufficient coverage.
He said dedicated quarantine facilities would be used for international travellers rather than returning Australians.
Victorian Premier Daniel Andrews foreshadowed a scenario where fully vaccinated returning Australians could avoid hotel quarantine from early 2022.
"They might have to answer a phone call a couple of times a day with facial recognition technology to establish that they are at home and they might only have to stay home for a few days until they got a negative test," he said.
"They may have to stay longer. It will depend. None of that is finalised but there is work to that end."
Australia is set to go from one to four dedicated quarantine facilities, but not until part-way through 2022.
The federal government will pay to build dedicated quarantine facilities in Western Australia, Queensland and Victoria to supplement hotels.
Last week, fast-tracked approvals of the WA and Queensland centres were pushed through parliament.
The Queensland government is going it alone on a second facility near Toowoomba.