Addressing the National Press Club during a visit to Canberra, Mr O'Neill also said the facility must eventually close, saying people can't remain on Manus forever.
The newspaper, The Age, reports him saying his government cannot afford to resettle those found to be refugees, fuelling concern that many more men will continue to languish on the remote northern island.
Since 2013 Manus has been hosting hundreds of asylum seekers who attempted to reach Australia before being intercepted by its naval forces and transferred to Manus for offshore processing.