State premiers are under pressure to break border deadlocks as businesses warn they are reaching boiling point.
Scott Morrison will plead with premiers and chief ministers to lift the restrictions when national cabinet meets on Friday.
Home Affairs Minister Peter Dutton is concerned for tourism operators and people in border communities cut off from health care.
"Lives are really being disrupted and you've got to ask why when the medical advice is not saying that is what is needed," Mr Dutton told the Nine Network.
"If we've got premiers who are pursuing an elimination process, the country will go broke."
Victoria recorded 179 new coronavirus cases on Friday, the first time the daily total has fallen below 200 in weeks.
The state also recorded another nine deaths, taking the national toll to 472.
All other states and territories have fairly negligible infection numbers, or none at all.
Queensland's border closures alone are estimated to cost $21 million and 173 jobs a day.
Qantas boss Alan Joyce says it is confusing why states with no cases are not open to each other.
Federal Agriculture Minister David Littleproud, who hails from rural Queensland, has poured oil on the debate.
"The inability or unwillingness of our premiers to work with each other to find common-sense and practical solutions to restrictions they have imposed is becoming a major test of their leadership," Mr Littleproud said.
"Premiers must remember that they are not just premiers of capital cities.
"I urge each of them to visit their impacted border regions as soon as possible and thrash out workable solutions with local governments, people, businesses and organisations."
He described the meeting as a "flashpoint for our federation".
"Unless premiers commit to work with one another to find workable solutions to state border issues for regional Australians, then they risk states becoming irrelevant to modern Australia."
Businesses and farm groups have queried border restrictions on large parts of Queensland, NSW, Victoria and South Australia that have no coronavirus cases.
There are also concerns about the inflexibility of rules preventing people who live near borders from accessing interstate health services.
The tourism and transport sectors want greater certainty about when to expect an easing of travel restrictions.
Mr Morrison wrote to state leaders on August 16 urging them to resolve problems, and has been working with individual premiers on specific solutions.
Aged care response plans for each state, working with the federal government, will also be on the national cabinet agenda.
There is also expected to be discussion about securing seasonal workers to pick fruit and vegetables.
Australian Associated Press