A "myopic" focus on Islamist extremism in Australia has set back efforts to curb the far-right movement, a Victorian parliamentary inquiry has been told.
Victoria's Legal and Social Issues Committee is investigating the recent emergence of far-right extremism, including neo-Nazis gathering in the Grampians and gallows erected outside state parliament as pandemic legislation was debated last year.
Liberty Victoria President Michael Stanton acknowledged far-right extremism is real but suggested politicians must be careful not to blindly expand executive powers, surveillance and censorship to combat its influence.
"We need to make sure that in responding to those confronting scenes in the Grampians ... or the erection of gallows outside parliament, that we do not have a legislative response that throws the baby out with the bathwater," Mr Stanton said.
"Sometimes that involves tolerating speech that we find offensive or humiliating."
The barrister said Australian law enforcement agencies and politicians' focus has been drawn away from neo-Nazis and other right-wing movements over the past 20 years by Islamist extremism.
"Since September 11, 2001 we have responded with a succession of draconian legislative responses to the threat of terrorism," he said.
"We now have control orders, controlled undercover operations, mandatory sentencing, post-sentence detention and supervision, citizenship-stripping laws, increased surveillance, data interruption and modification laws.
"The question that all raises is: are we safer?"
Institutional transparency, repairing faith in government and media, and separation of powers are "fundamental" in halting right-wing extremism, he said, not sweeping reforms.
"To cast their net more broadly risks increasing stigmatisation - the kind of stigmatisation faced by the Muslim community, or parts of the Muslim community, in Australia for almost two decades - and risks being counterproductive," Mr Stanton said.
On top of probing far-right extremism in Victoria, the inquiry is studying how the COVID-19 pandemic has affected its apparent growth.
Mr Stanton argues it is unhelpful to stigmatise a "disparate" group of protesters, such as those seen across six lockdowns in the state, by connecting them to extremism.
The inquiry was announced in February after a push from the Greens following the neo-Nazi gathering in the Grampians, uncovered by investigative journalist Nick McKenzie.
The Nine newspapers and 60 Minutes reporter, who infiltrated the National Socialist Network, said Victoria is not doing enough to stop the radicalisation of children online.
Further, Mr McKenzie said de-radicalisation programs in prisons and schools are not working and viewed as a "joke to be studied and exploited" by the NSN, which he described as "sloppily organised".
"Just because they're - if I can use the term - idiots does not make them less dangerous," he said.
Victoria has introduced legislation to ban the intentional public display of the Nazi swastika, also known as the Hakenkreuz, across the state.
The Victorian government had planned for the laws to come into effect 12 months after passing to carry out an education campaign, but has shortened the delay to six months after swastika stickers were plastered across Caulfield the day after the ban was announced.
Jewish Community Council of Victoria chief operating officer Naomi Levin told the inquiry the body advised the Andrews government the laws should be implemented immediately.
The inquiry is due to report back to parliament with its findings and recommendations by August 4.
Hearings will continue on Wednesday.