Labor senators Malarndirri McCarthy and Patrick Dodson and Lidia Thorpe put forward a motion in the upper chamber on Tuesday to fly the Aboriginal and Torres Strait Islander flags during NAIDOC week.
However, the motion was voted down - with just 28 senators for the motion, while 29 were against.
Liberal senator Anne Ruston told the Senate chamber the Australian flag was the only appropriate national flag to display in the upper house.
“There are many places and circumstances to appropriately display the flags of our nation - including the Aboriginal and Torres Strait Islander flags ” she said.
“The government believes that the Australian national flag which represents all Australians is the only appropriate flag to be flown in the Senate chamber. ”
The motion called on the federal government to fly both the Aboriginal flag and Torres Strait Islander flag alongside the Australian flag in the chamber at Parliament House.
Ms McCarthy told the Senate the opportunity was a lost chance to showcase Indigenous culture after Black Lives Matter rallies saw thousands of Australians take to the streets earlier in the year.
““This is the time to do it - this is the time to engage in a way that is deeply sincere and reflect on the year that we have had. Not just COVID 2020," said Ms McCarthy.
“Let me take you back a couple of months - the Black Lives [Matter] rallies across this country - where millions of Australians took to the street… that the deaths of Indigenous Australians is still occurring at a higher rate than it should be. That there has been no justice…
"Today we could have done something to unite our country through symbolism.”
“This was one week - out of 52 weeks where this Senate and the other house could stand up and do something and say something meaningful for First Nations people in this country.”
The senators had hoped that the motion would be passed and the flag could have been flown as early as next month.
Ms McCarthy said the result of the vote within the Senate was particularly inappropriate during NAIDOC week.
“Why is it during NAIDOC week that the Government could be so mean spirited?"
Ms McCarthy called on the Government to better engage with Indigenous peoples and use the National Cabinet to reduce incarceration rates of First Nations people.
Senator Patrick Dodson said that the flags should be flown both inside and outside Parliament House to acknowledge First Nations peoples.
“All three flags are flying outside Parliament House during NAIDOC Week, yet not inside the two houses of Parliament,” he said.
“Once again, the Morrison government is choosing division over unity, and ignoring the 65,000 years of Aboriginal and Torres Strait Islander history in this country, as well as ignoring the fact that the Aboriginal and Torres Strait Islander flags are recognised as national flags.
"Doing so during NAIDOC Week further rubs salt into the wound.”