NT Labor Senator Malarndirri McCarthy says there is "a void in leadership" in government when working with First Nations people.
Her comments follow intensifying debate over January 26 over the past few weeks.
'What we've seen with all the discussions around the country and certainly the inappropriate and offensive commentary by members of government to First Nations people and organisations shows that there is a lack of leadership from the Prime Minister down," Senator McCarthy told NITV News.
Last week, Cricket Australia announced that they would remove the 'Australia Day' branding from their January 26 matches.
The decision sparked Prime Minister Scott Morrison to say the day "wasn't a particularly flash day" for those on the First Fleet either.
This assertion was met with outrage - and eye-rolling - on social media.
A racist Facebook post from Federal MP Andrew Laming on Cricket Australia's decision was also met with anger and calls for his resignation.
"Deny it's Australia Day. That'll help petrol sniffing and school attendance in remote Australia," the post said.
Mr Laming also attracted the 'disgust' of fellow politicians, at both state and federal levels.
"These racist comments are grubby and disgusting and below the standards that we should expect to the elected officials in our country," Queensland Deputy Premier Stephen Miles said.
'Offensive and disappointing'
Senator McCarthy said the comments were "totally inappropriate".
"January 26 is a day that will bring up many views and opinions and it's important that elected representatives enable those discussions to occur without insulting the people that are making those calls," she told NITV News.
"In terms of Andrew Laming those comments were offensive and deeply disappointing and I would certainly ask him to refrain from making those comments in the future."
Others called for oversight from the Prime Minister to reign in such offensive comments from elected officials.
Most recently, the ABC has come under fire from Communications Minister Paul Fletcher for including 'Invasion Day' in their January 26 coverage.
"The name of our national day is well understood and supported, and for the ABC to suggest otherwise — that in some way Invasion Day is interchangeable with Australia Day — is clearly wrong," he said.
Senator McCarthy said the focus needs to be on "changing attitudes" regarding our collective history.
"There is a history here that is quite traumatic and a history that lives on through intergenerational trauma for First Nations people," he said.
"But it's a history that we can also move forward from... it is about reflection, respect and observing that we have a history that we aren't proud of, but we also want to go forward and be stronger as a people together."
While speaking at a morning tea to honour the First Nations nominees for this year's 'Australia Day Honours', Minister for Indigenous Australians Ken Wyatt echoed the need to "reflect and respect" on January 26.
Mr Wyatt said it was also a day to "celebrate the story of this nation".
"I know that the story of Australia Day includes feelings of pain for many of us," he said.
"That's ok. We should take some time on Australia Day to reflect upon the sacrifices many have made, the challenges we have faced, losses felt, and the adversity we have overcome to stand as here as Australians, one and free."
"We have not only survived, but we have thrived."