Welcome to Country speakers being booed was an example of the "bad behaviour" that had emerged since the referendum was decisively defeated in October 2023, Reconciliation Australia CEO Karen Mundine said.
She told a federal inquiry on Friday that surveys had shown a significant spike in racism against First Nations people in 2023.
After the bid to have an Indigenous voice in federal parliament failed, Ms Mundine said racists had become louder and called for leaders to demand a societal reset.
Racist comedians and media had emerged since 2023, along with the rise of Welcome to Country speakers being booed.
Heckling and boos during acknowledgement of Country addresses marred Anzac Day dawn services in April, prompting strong condemnation by politicians and the RSL.
Broader public permissiveness and assumptions that such behaviour was acceptable had risen, Ms Mundine told the federal inquiry into racism, hate and violence directed at Aboriginal and Torres Strait Islander People in Canberra.
"Leaders need to reset where our societal norms are in terms of calling out bad behaviour and bad actors," she said.
Data showed younger Indigenous people were more likely to experience and report racism, reflecting their greater engagement with social media, she said.
Racism against First Nations peoples was pervasive and harmful, with recent reports showing more than half of Indigenous people had experienced such discrimination, Ms Mundine said.
Victorian Senator Lidia Thorpe asked her if Australia had progressed in tackling racism since 2000 when the Reconciliation Council concluded the nation was "too racist to reconcile".
Ms Mundine maintained there had been progress but not at the level desired, though people understood better now what racism was.
"We're trying to unpack 200-plus years and we've only just scratched the surface," she said.
Reconciliation Australia had a focus on programs that changed embedded racism in institutions and workplaces.
"What we're trying to do is influence how they do their business and how they reduce harm to our people," Ms Mundine said.
"It's a journey, it's not perfect, but we've got to start somewhere."
Senator Thorpe questioned how mining giants like BHP could have successful reconciliation action plans when they operated on stolen land and were "disrespectful to our elders and Traditional Owners".
But Ms Mundine said if everyone who had inflicted harm on First Nations people was kicked out of the reconciliation process, "we wouldn't have anyone to work with" to push them to do better.
She disagreed with Senator Thorpe that reconciliation was a soft form of engagement that was "a dangerous distraction from real change".
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