He cited the Senate motion by Pauline Hanson made last month declaring that "it's OK to be white".
"On the face of those words, without any context, you may think there's nothing objectionable about that," he said.
"[But] 'it's OK to be white' is a slogan used by white supremacists, by neo-Nazis who use it deliberately to make their ideas sound benign and unthreatening... It's not about the literal form of the words, it's about the meaning."
"If we are not careful about calling out the dangerous appeals to racial homogeneity, purity or integrity, then we can end up in a situation where parliament here in Australia can normalise white supremacist slogans."
Mr Soutphommasane also questioned the backlash against identity politics in Australia.
Source: Festival of Dangerous Ideas
"Let's be absolutely clear about one thing - identity has always featured in our politics," he said, citing the White Australia Policy.
He said the backlash is because of a "sense of disempowerment" from "some of majority-background, that their identity politics is being called out".
The former race discrimination commissioner also said there is a crisis of civic literacy in this country.
"Not many people would know nearly enough about our system of government," he said.
"I would even venture that it's likely that naturalised citizens, those who have to sit a citizenship test, are likely to know a lot more about Australian democracy than those who have citizenship as a birthright."
Regarding the upcoming federal election, he only had one piece of advice; "citizens have to take responsibility, you get the democracy you deserve".
Mr Soutphommasane served as race discrimination commissioner for five years from 2013-2018.
During his tenure, he often spoke out against the current government, such as vigorously opposing changes to section 18C of the Racial Discrimination Act.
He also criticised government ministers for leading debates about "ethnic separatism" and sparking "panic and hysteria about African gangs".
It comes as Australia's new race discrimination commissioner recently vowed to adopt a lower profile.
Source: SBS News/Rose Bolger
Chin Tan told the Financial Review last month that "there's probably been a bit too much publicity for what is really a senior bureaucrat's position".
"It's a public service role... for me, the role is to get things done, to work with communities and government and stakeholders to find what are the issues and deal with them. I'll leave the politics to the politicians."