Almost 90 percent of migrants to Australia are settling in Melbourne or Sydney, data has revealed.

According to figures released by the Department of Home Affairs on Tuesday, 87 percent of people who arrived in Australia on skilled migrant visas in the last financial year permanently settled in Melbourne or Sydney.

The statistics were released just hours before Australia's population was set to hit 25 million, sparking debate over the nation's population growth.

Prime Minister (PM) Malcolm Turnbull has previously signalled his intention to direct more migrants towards smaller cities where population growth has stagnated.

In a speech to a Business Council of Australia (BCA) forum on Tuesday, Citizenship Minister Alan Tudge said that population growth was not a "one-dimensional issue."

"Rather, it involves size and distribution," Tudge said.

"If the population was distributed more evenly, there would not be the congestion pressures that we have today in Melbourne and Sydney.

"There are some people who believe in a big Australia, and ?others who want lower population growth.

"Regardless of these diverse views, what is important is that population growth is managed in such a way that it benefits all Australians. The case for further skilled migration is strong, but this does not translate to meaning that the more skilled migrants the better. There is a balance to be made."

Turnbull and Home Affairs Minister Peter Dutton have reduced the annual skilled migrant intake from 190,000 to 162,000 - the lowest figure.

Former PM Tony Abbott urged the government to go even further and reduce the figure to 80,000.

However, Treasurer Scott Morrison warned that reducing migration so dramatically would cost the Australian budget 5 billion Australian dollars (3.69 billion U.S. dollars) over the next four years.

Treasury and Department of Home Affairs data revealed that Australia's immigration policy accounted for 1 percent of the nation's gross domestic product (GDP).

"Of course, with a larger economy, there is more scope for investment in public goods, including national defence," Tudge said.

He urged the business community to consider the impact of migration on house and land prices, congestion and utilities before weighing into the debate.

"In addition to this, if migration is not managed carefully, it can lead to social fragmentation and heightened security issues," Tudge said.

"It is important for business leaders to understand these other factors as much as the benefits which skilled migration brings.

"Faster population growth may help their bottom line, but it is the broader community that pays for much of the congestion and pressures on social cohesion."

Under proposals being considered by Turnbull to curb population growth in Melbourne and Sydney, a larger portion of migrants would be settled in Adelaide, one of Australia's slowest-growing capital cities.

The Australian Bureau of Statistics (ABS) found that Melbourne's population grew by 2.7 percent in financial year 2017 while Sydney's increased by 2 percent.

During the same time period, the number of people calling Adelaide home grew by just 0.7 percent, making it the second slowest growing capital city ahead of only Darwin (0.5 percent).

Tudge has reportedly engaged in talks with South Australian Premier Steven Marshall about channelling more migrants to the state.