Liberty Victoria President Michael Stanton has acknowledged the recent emergence of far-right extremism in the state, citing neo-Nazis gathering in the Grampians and gallows erected outside state parliament as pandemic legislation was debated last year.
He told an inquiry on Tuesday that far-right extremism is real but argued Victorian politicians need to 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 - whether it be Nazi salutes or display of the swastika - 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' focus has been drawn away from neo-Nazis and other far-right movements over the past 20 years by Islamist extremism.
Both must be addressed, Mr Stanton said, but Victoria's parliament should not cast the net too wide with any reforms.
"The focus should be on those people who are directly likely to be engaged in committing violent acts," he said.
"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."
As well as investigating the rise of far-right extremism in Victoria, the inquiry is studying how the COVID-19 pandemic has affected its apparent growth.
Mr Stanton argued it was unhelpful to stigmatise a "disparate" group of protesters, such as those seen across six lockdowns in the state, by connecting them to extremism.
"If we lump those people in with extremists, and if they feel disrespected, then this only will reinforce the messages of those extremists that the government isn't to be trusted," he said.
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 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 places such as jails are not working and are viewed as a "joke to be studied and exploited" by the NSN.
The inquiry, led by the Legal and Social Issues Committee, is due to report back to parliament with its findings and recommendations by August 4.
The hearing continues.
