"His far-left victimhood narrative was never going to bring Australians together," Abetz said.
Prime Minister Malcolm Turnbull often describes Australia as the most successful multicultural society in the world.
Half the population of 25 million people was born overseas or has at least one parent born in another country.
But public debate has heightened about the rate of population growth and how some ethnic groups are blending in.
The anti-Muslim, anti-immigration minor party One Nation won seats in Parliament at elections in 2016 for the first time in 20 years. Defections have already halved the party's representation from four to two senators, but they remain influential.
The Government, citing allegations of Russian interference in the last US presidential election, passed sweeping national security legislation in June that bans covert foreign interference in domestic politics.
China protested against the legislation and its ambassador to Australia, Cheng Jingye, said in June the strained diplomatic relationship between the two countries needed to move away from "bias and bigotry" and build trust.
Soutphommasane said that Chinese-Australians were being abused by fellow Australians and were reluctant to take part in public debate for fear they would be mistaken for Communist agents.
Many Sudanese-Australians feared leaving their homes because of public panic about African street gangs in the city of Melbourne, Soutphommasane said.
The French-born son of ethnic Chinese and Laotian parents accused federal and state governments of fuelling the "panic and hysteria".
While Australia has had a non-discriminatory immigration policy since the 1970s, Southphommasane was critical of government plans to introduce a tougher English language test for immigrants who apply for citizenship.
Before the speech, Southphommasane used a tweet to accuse Sky News Australia television of "a shameful low" by broadcasting an interview on Sunday with an Australian neo-Nazi who has a criminal record for violence.
Sky New conceded the interview was a mistake and removed it from all its platforms. Two Sky News hosts also condemned the interview and a former government minister, Craig Emerson, quit his job as a Sky News commentator, accusing the cable and satellite news channel of "normalising racism and bigotry" in Australia.
-AP
