The Human Rights Comission report, to be launched today, was based on public consultations held this year into how individuals and communities experienced racial discrimination.
It noted that many Muslim Australians reported a rise in anti-Muslim sentiments.
"Much of this is linked to the issue of terrorism and national security," the report said. "According to various participants, the raising of the official terror alert in August 2014 has made many Australian Muslims feel a sense of 'us versus them'."
"Various participants confirmed that Muslim women, particularly those who wear visibly identifiable religious garb such as a hijab, felt fearful of being abused on public transport."
The report was not isolated to one community, stating that "such concerns were not confined to any single ethnic or cultural group".
"One participant of African background in Hobart, for example, spoke about how another person of the same background warned her that she should always sit in the front of the bus just behind the driver where possible, because it was the place in the bus where one would be least likely to be harassed."
"According to various participants, the raising of the official terror alert in August 2014 has made many Australian Muslims feel a sense of 'us versus them'."
Respondents reported experiencing discrimination in employment settings, and said not having an Anglo-Saxon name often came at a disadvantage.
"I can tell you, I mean this actually happened with my daughter. My daughter's name is … a very classical Indian name. When she applied under that name, when she was a university student, [the employer] didn’t want to call her for an interview. What she did, she took her mother’s name who is Australian, she put Alison, and within three hours she was called for an interview, for the same identical job," one respondent said.
The report noted that distinction between racial and religious abuse sometimes made it difficult to protect Muslim Australians under the Racial Discrimination Act, because it did not cover discrimination based on religion.
"For many Muslim Australians, there was little distinction to be drawn between religious discrimination and racial discrimination. Being on the receiving end of anti-Muslim sentiment was often described in terms of racism," it said.
"When she applied under that name, when she was a university student, [the employer] didn’t want to call her for an interview. What she did, she took her mother’s name who is Australian, she put Alison, and within three hours she was called for an interview, for the same identical job."
Many respondents of Aboriginal and Torres Strait Islander background said a lack of diversity in government and public institutions was a major contributor to systemic racism.
"There was agreement among Aboriginal and Torres Strait Islander participants in Perth, Darwin and Brisbane...that systemic or institutional discrimination was the main challenge in combating racism," the report said.
It said racial discrimination had a range of detrimental effects from damaging personal wellbeing to making people feel unsafe and unwelcome.
"For those on the receiving end, the experience of racial abuse can alienate them from Australian society – and feed a sense of disillusion and disempowerment."
