The head of the government's disaster recovery agency has been told to resign after brashly criticising floodplain development.

More than a week of flooding across southern Queensland and large parts of NSW has left over a dozen people dead, significant injuries, homes and lives destroyed. Evacuation orders are still being issued with more heavy rain on the way.

Late last week, National Recovery and Resilience Agency (NRRA) head Shane Stone appeared to criticise flood victims in an interview, telling reporters: “You've got people who want to live among the gum trees, what do you think is going to happen? Their house falls in the river, and they say it's the government's fault”. 

“Australians need to have an honest conversation about where and how people build homes.

“The taxpayer and the ratepayer cannot continue to pick up the bill for these huge, catastrophic damage events.”

Mr Stone - a former Northern Territory chief minister and Liberal Party president - was appointed by Prime Minister Scott Morrison to lead the NRRA. 

He acknowledged these were “fighting words” for the flood-hit communities, but said residents must “face realities” and called for councils to end their “poor planning decisions”.

Labor senator Murray Watt slammed the insensitive comments.

“Shane Stone should be sacked today,” he said.

“Scott Morrison's mate and hand-picked disaster tsar blames flood victims for their hardship, saying they 'want to live among the gum trees'. 

“They need our support right now. 

“They don't deserve to be kicked by the man who is supposed to be helping them.”

Mr Stone steadfastly rejected that call, telling Sky News; “This is a hard job”. 

“There was nothing flippant about [the comments] at all ... we've got people in the bushfire zone who are wanting to go back and build exactly where they were before.”

He insisted that the agency does care about the people it is meant to assist. 

“People can be reassured that we are there to help,” he said.

“We are there to help the survivors, and we'll do everything we can. That other conversation will be ongoing.”

Deputy Prime Minister Barnaby Joyce backed the claims.

“If I build my house on an alluvial floodplain, then I've got to expect from time to time there will be floods,” Mr Joyce told reporters in Orange.

“If you accept the risk and are prepared to wear the risk, then I suppose you can build your home where the local government authority allows you to build it.”

The Insurance Council of Australia (ICA) says close to 3 per cent of NSW homes are now in frequent flood zones and 15 per cent are susceptible to flood.

The ICA has called for interventions in areas that cannot be covered by the private insurance market. 

Those interventions include building higher levies, rebuilding raised houses and not rebuilding at all in some areas.

“I welcome comments by NRRA head Shane Stone and look forward to taking up this issue with state and federal governments in coming months,” ICA chief Andrew Hall said.