Research from the Diabetes Council of Australia has found that people living in rural and remote areas are much more likely to have the disease than people living in well-off inner-city areas.
More than 85 percent of diabetes is the preventable Type-2, which is often caused by things like bad diet and lack of exercise.
Some experts say bans on junk food advertising are needed to halt the trend.
Correspondent: Will Ockenden
Speaker: Nicola Stokes, chief executive, Australian Diabetes Council; Professor Lesley Campbell, director of diabetes services, St Vincent's Hospital, Sydney; Dr Alan Barclay, head of research, Australian Diabetes Council
OCKENDEN: The Australian Diabetes Council has been poring over the latest Bureau of Statistics Census data.
STOKES: More and more people are being diagnosed as this disease increases between 8 to 10 per cent per annum.
OCKENDEN: Nicola Stokes is the charity's chief executive.
STOKES: There's two sides to that. One is good - it means that the previously undiagnosed are actually getting to their GP. The second part unfortunately is that the disease is growing because people are not diagnosed and that they're also not managing the complications associated with the disease.
OCKENDEN: Nicola Stokes says 290 people every day in Australia are now diagnosed with type-1 or type-2 diabetes.
The surging rate could lead to a big increase in heart disease and also kidney problems. That in turn leads to liabilities on the public health system, which has to pay for more people to undergo dialysis.
Nicola Stokes says type-2 diabetes already is estimated to cost $10 billion a year, and that's expected to grow rapidly.
STOKES: Diabetes can cause fatty deposits to be laid down on the walls of your blood vessels, and that impacts your heart, it impacts stroke and also kidney failure in the macro size of the disease and in micro it means blindness and the extremities of your body - feet and hands.
OCKENDEN: Like many diseases, people who live in poorer or rural and remote areas are much more likely to have diabetes.
The Diabetes Council census study looked only at New South Wales examples, but it found 10 people 100 have diabetes in Broken Hill.
That's compared to the rich area of Sydney's north shore, where the rate is significantly lower, at 2.5 per 100.
STOKES: And so our lower socioeconomic groups, who are driven by unemployment, lower levels of education and lower household medium income, have highest rates of diabetes in the country.
OCKENDEN: The biggest growth rate is the often preventable type-2 diabetes, which represents 85 per cent of all diabetes cases.
Dr Alan Barclay, the head of research at the Australian Diabetes Council, expects diabetes will continue to grow in the population.
BARCLAY: We've got an ageing population in Australia as we all know, we're living for longer and we're having less children. Like there was one third of the population with children in the seventies and today it's one quarter of the population for example.
And we're all getting heavier as well, we're getting not just taller but we're getting fatter as well, so there's an overweight and obesity epidemic in this nation and the culmination of the increased age and obesity is basically wearing out the pancreas and it increases insulin resistance as well and the combined effect is the development of type-2 diabetes.
OCKENDEN: Professor Lesley Campbell is the director of diabetes services at St Vincent's Hospital in Sydney. She says she's also seeing the rate of diabetes increase in children.
CAMPBELL: We are talking about type-2 diabetes which is now occurring in children. I can think of a case that I saw recently in the east where I am, where someone referred a child who was going blind from type-2 diabetes, but the child came from the west and had not been sufficiently well treated and after we treated the child, we then found the mother had the same disorder and we were able to access the mother as well.
OCKENDEN: She says a way to reduce diabetes in the population would be to heavily regulate the advertising of many types of fast food.
CAMPBELL: The high sugar soft drinks and I think similar high sugar, high fat food cheaply available, advertised in ways to children that are very attractive, should be curbed.
I think that would be the simplest thing. I think if we're really serious, we should be thinking about some of these things as we did about tobacco.