Australia Day divide shrouds Vic events

Smoking ceremonies have marked a day of mourning for Indigenous people before Australia Day protests contrasted with picnics and parties in Victoria's cities and parks.

Official commemorations kicked off with a flag-raising ceremony at Government House before thousands gathered for a major Invasion Day rally through the city centre.

Acting Premier Jacinta Allan and Governor Linda Dessau both touched on divisions over the date of Australia Day as Ms Dessau urged people with opposing views to listen to what others had to say on the topic.

"They can hold their views strongly without one being immovably right and the other wrong, or one good and the other evil," she said.

For the third year in a row, there was no Australia Day parade through Melbourne city but Federation Square hosted a family-friendly festival with free entertainment and food.

Rosemary Speidel said she felt proud to be Australian after immigrating to the country from Europe.

"I think Australia Day is a beautiful day," Ms Speidel told AAP.

"All cultures can live together in harmony and celebrate each other."

Friends and families flocked to restaurants and public spaces, making the most of the public holiday, but many were not in the mood to party.

Ewan Dowie and several friends held a picnic in Melbourne's botanic gardens but the group was intentionally not celebrating Australia Day.

"Do I agree with the reason for the public holiday? Not personally," he said.

"But if someone is going to give me a day off I'm going to make the most of it. I do think it's insensitive and doesn't represent the current times."

A 21-gun salute took place at the Shrine of Remembrance before the Roulettes conducted an air display, while Indigenous musicians took to the stage the Sidney Myer Music Bowl for the Share the Spirit Festival.

Thousands of solemn Victorians, many wearing T-shirts emblazoned with Aboriginal flags, gathered outside the state's parliament, joining in calls for justice ahead of a march through Melbourne's CBD.

Speakers at the rally decried Indigenous deaths in custody and called for a treaty while speaking out against the voice referendum - although it was made clear the rally did not back a "no" campaign.

Cries of "shame", "f*** Australia Day" and "sovereignty" rang out from speakers and the crowd.

Greens Senator Lidia Thorpe told the crowd a war had been declared on Indigenous people over 200 years ago as she made a case for a treaty over the voice.

"They are still killing us, they are still stealing our babies, they are killing our men, and they are still raping our women," she said.

First Peoples' Assembly of Victoria co-chair Marcus Stewart earlier said people against a voice were "out of step with the views held by the vast majority of our mob."

"It's hard to watch a handful of outliers hijack the rally and attempt to destroy the most significant opportunity we've had to create meaningful structural change at a federal level by fuelling the 'no' campaign," he said.

Dawn smoking services were held in Kings Domain, St Kilda and other locations around the state.