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People could be offered thousands of dollars in tax breaks and cash incentives to move under a coalition plan to develop northern Australia.

Immigration rules could also be relaxed to lure more foreign workers but Tony Abbott has ruled out zonal taxation rates and mass "civil conscription" of public servants to relocate them to northern areas, such as Karratha.

The Opposition Leader appeared to also kill off a proposal diverting $800 million in foreign aid into tropical health research and training, saying: "The idea of a specific redirection of foreign aid in that way is not going to be our policy."

But Deputy Opposition Leader and shadow foreign affairs minister Julie Bishop said the idea had merit given the devastating impact of diseases in the region, such as tuberculosis in Papua New Guinea.

She said the $800 million figure was "not correct". The final coalition policy would likely propose diverting about $80 million.

But Liberal frontbencher Andrew Robb, who compiled and distributed the draft paper for consultation, is understood to be standing by the $800 million figure.

Mr Abbott acknowledged zonal tax rates would be unconstitutional but there were other ways to encourage people to shift north.

"There is nothing wrong with a system of targeted incentives, of rebates, for instance; that's existed in a form for many years and we are obviously happy to look at how that might be improved," he said.

Mr Abbott said he had not spoken to Australia's richest person and one of the most vocal backers of northern development, Gina Rinehart, about the plan but was happy for his frontbenchers to do so.

Special Minister of State Gary Gray branded the coalition's plan a "rehash of old ideas" and warned families in the cities would be slugged to pay for it.

He said nearly 60 per cent of Federal public servants worked in capital cities and regional centres outside Canberra, including 6600 in Perth.