The spread of lies and fake news makes it harder for emergency responders to do their job and impacts social harmony, but conflict remains over how to stifle it.
A crackdown on misinformation and disinformation would force tech giants to act on falsehoods but free speech proponents are worried federal government legislation goes too far.
Misinformation could put people at risk by eroding trust in emergency services and clouding accurate and lifesaving information on social media, National Emergency Management Agency deputy co-ordinator general Joe Buffone said.
There needed to be an ability to intervene against posts that actively sought to spread false information and cause harm "ensuring that the accurate information is amplified and is corrected", he said.
"Emergency communications have the potential to make or break a response - those efforts can be undone by relatively small amounts of mis and disinformation," Mr Buffone said.
He said sensationalist posts that did not reflect reality on the ground created fear and uncertainty.
The proposed laws were a lever that could help hold tech giants accountable and provide a method to crack down on disinformation that would save emergency resources, he said.
Spreading misinformation was used to dehumanise minorities and incite hatred in an "extremely visceral and powerful way", Australian Muslim Advocacy Network legal advisor Rita Jabri Markwell said.
Muslims were contending with people labelled rapists and murderers because of their faith, which then made violence against them acceptable and led to extremism, she told the hearing.
She pointed to the Christchurch massacre where dozens of Muslims were killed in a mass shooting at a Mosque by a far-right extremist.
"It's the job of public regulators to act here and treat racism as a public harm for health because it is a harm to our health," she said.
But there was concern the laws overreached as they aimed to capture claims, opinions, commentary and invective.
Some content such as scam material could easily be proved false but constitutional law expert Anne Twomey said this became more complicated when talking about opinions, commentary or claims.
"You can't prove someone's opinion is false - it's an opinion," she said, adding that even if you relied on expert analysis, there could be varied perspectives.
Trying to arbiter truth in opinions landed you "splat bang into political communication and that's where the thing will fall over", she said, referring to the constitution's political freedom protections.
Defining disinformation as an intent to deceive someone was also problematic, Dr Twomey said.
Someone being told a fact was false before repeating it did not mean they intended to deceive as they could genuinely have believed it was true, she said.
Labor's legislation faces a jagged path through the Senate, with the coalition arguing it curbs free speech and crossbenchers expressing reservations including having social media platforms decide what constitutes misinformation.
