Queensland has announced it will open its border with NSW from next month but Western Australia is stubbornly refusing to abandon a hardline approach.
From November 1, people in NSW will be allowed to cross the northern border without being forced into hotel quarantine.
The plan is conditional on NSW remaining without unlinked community transmission of coronavirus, with the tally currently at six days.
WA Labor Premier Mark McGowan claims there is no economic benefit for his state to open up to South Australia and the NT, where there are no active cases.
But senior federal cabinet minister Mathias Cormann, who is a WA senator, rejects this.
"Mark McGowan yesterday was a running an economic protectionist argument in favour of continued state border closures," he told Sky News on Friday.
"Economic state protectionism is explicitly prohibited in the Australian constitution."
WA's border restrictions remain popular according to opinion polls which have recorded massive approval ratings for Mr McGowan.
But Senator Cormann believes support will evaporate as the economic damage begins to bite and families are prevented from visiting loved ones interstate.
Home Affairs Minister Peter Dutton renewed his attacks on Queensland Labor Premier Annastacia Palaszczuk before the border announcement.
Labor deputy leader Richard Marles called for the federal government to provide leadership on internal borders.
"They are on the sidelines like kids in the schoolyard yelling out, 'fight, fight, fight'," he told the Nine Network.
"They are not trying to solve anything. They are just throwing rocks at it."
Limited international travel into NSW and SA could soon restart, with Australia on the verge of opening up a one-way passage for New Zealanders.
Mr Dutton said inbound tourists from across the Tasman could be segregated on arrival to exempt them from quarantine.
"It would be a big win for tourism operators right across the country, a big win for the economy and for jobs at a time when we really need them," he said.
Victoria recorded just seven new cases of coronavirus on Friday, along with two deaths, taking the national toll to 890.
The Morrison government is also under immense pressure over aged care after a royal commission condemned deplorable conditions in nursing homes.
Senior ministers have promised big changes in the troubled sector ahead of Tuesday's federal budget.
An initial $40.6 million has been spent in response to the damning inquiry report, with the government accepting all six urgent recommendations.
