The deadly floods that swept through NSW and south-east Queensland last year caused around $5 billion in economic losses alone, according to preliminary Treasury estimates.
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As communities in South Australia and the Kimberley have become the latest to be hit by devastating inundation, Treasurer Jim Chalmers has released Treasury figures showing that last year's floods sliced 0.25 of a percentage point off national growth as industries from agriculture, mining, hospitality, retail and construction grappled with significant disruptions to production, hampering supplies and fuelling inflation.
More than 291,000 disaster-related insurance claims worth $6.7 billion have been lodged since January last year, according to the Insurance Council of Australia.
Separate analysis by the National Emergency Agency shows that last year 68 per cent of Australians lived in a declared natural disaster zone, a figure the Treasurer described as "stunning".
An Insurance Council spokesperson said a quarter of disaster-struck local government areas had been hit with two extreme weather events in the last 12 months and 21 per cent had suffered three or more.
"These natural disasters are first and foremost a human tragedy and that will always be our main focus, but there are substantial costs to the economy and Budget too," Dr Chalmers said.
"We know these types of disasters put up prices, slow down growth in the near term, and cost the Budget billions of dollars."
The Treasurer said the impact of extreme weather events would be one of the key factors weighing on the economy this year.
His warning follows the release of analysis by global reinsurer Munich Re showing that last year's floods were the fourth most costly natural catastrophe in the world, behind Hurricane Ian that tore through Florida and Cuba in September, deadly Pakistan floods that claimed 1740 lives and an earthquake that struck Japan in March.
"Climate change is taking an increasing toll," Munich Re Board member Thomas Blunck said.
"The natural disaster figures for 2022 are dominated by events that, according to the latest research findings, are more intense or are occurring more frequently. In some cases, both trends apply."
A separate report commissioned by the Australian Business Roundtable for Disaster Resilience and Safer Communities found that natural disasters currently cost Australia $38 billion a year and the bill could reach $73 billion a year by 2060.
The research, undertaken by Deloitte Access Economics, found that even if global average temperature increases were limited to 1.7 degrees Celsius, losses from natural disasters would cost Australia almost $40 billion a year, and the bill would jump to $82 billion if temperatures rose 2 degrees by 2050, and could reach $94 billion a year if the increase reached 3 degrees by 2060.
In the report, Business Roundtable chair and IAG managing director Nick Hawkins said the findings showed it was critical to act to limit climate change and better prepare communities for extreme weather events.
Dr Chalmers said the economic and financial impacts of natural disasters would be a "big focus" of the Budget in May and the government would also look at action to mitigate the effect of future disasters.
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"Our job as a government ... is to make our budget more responsible, our economy more resilient, and that means doing a better job [of] mitigating where we can, getting in ahead of some of these natural disasters to make our communities more resilient too," he said.
The government has established the Disaster Ready Fund, worth $1 billion over five years, to help fund resilience projects, has set up the National Resilience Taskforce and is working with the insurance industry through the Hazard Insurance Partnership on disaster mitigation initiatives.
Australia Institute principal adviser Mark Ogge said while investment in disaster mitigation was "really good", it would count for little if the government gave approval to more than 100 fossil fuel projects currently in the pipeline.
Mr Ogge said those projects would collectively add 1.7 billion tonnes of emissions into the atmosphere, which would undermine its climate agenda and disaster mitigation investments.
He said the government should impose a levy of at least $1 per tonne of carbon emitted on oil and gas companies and direct the funds to climate change and disaster mitigation activities.
"Australians understand that either we get them to pay for the [damage] they are causing, or we - households and businesses - have to pay," Mr Ogge said.
