Victorian Aboriginal Child Care Agency chief executive Aunty Muriel Bamblett gave evidence at the state's truth-telling inquiry on Tuesday, calling for a properly funded child protection plan and system run by Aboriginal people.
The agency's submission acknowledged Victoria has Australia's best child protection system on the face of it, but suggested record investment by successive governments actually entrenches disadvantage, intergenerational poverty and cultural genocide.
The better alternative is Aboriginal-led organisations, with Indigenous childcare agencies returning children to safe and supportive families at twice the rate of other providers, the agency suggested.
"Every problem we have today in Victoria's child protection and criminal justice systems is a direct result of centuries of racist policies, legislation and reinforced discriminatory practice," Ms Bamblett told media following the inquiry.
"Victoria's infatuation with a system that places less value on the lives and cultures of Aboriginal children needs to stop."
Former Victorian government staffer Aunty Glenys Watts told the Yoorrook Justice Commission of systemic racism and bullying within the child protection system.
She recalled a toxic work culture where her colleagues openly bullied the people they were paid to help.
"I just felt like it was lateral violence the way they were talking," Ms Watts said on Tuesday.
"Child protection were really rude. They'd talk about children and they'd be talking to youth and I used to cringe at my desk thinking, you know, 'This isn't right'."
Ms Watts, a Gunaikurnai woman, spent seven years working for the Department of Families, Fairness and Housing, which was previously part of the Department of Health and Human Services.
The unprofessional conduct got so bad she filed an internal complaint and was eventually ostracised for doing so, Ms Watts told the commission.
She later learned other employees had also made internal complaints, but could not say if any disciplinary action was taken.
The inquiry is looking into why Aboriginal people are over-represented within the child protection and criminal justice systems.
Ms Bamblett, a Yorta Yorta and Dja Dja Wurrung woman, said Aboriginal kids made up 20 per cent of children in care but received only seven per cent of funding for family services.
"We have to look at the past to see the challenges we face today, the patterns of removal and the disconnection from country," she said.
Victorian Aboriginal Community Controlled Health Organisation chief executive Aunty Jill Gallagher, a Gunditjmara woman from Victoria's west, broke down in tears while addressing the commission.
"I believe the system is riddled with racism, it focuses on punishment and not rehabilitation and it needs to change," she said.
Ms Gallagher said she believes the systemic racism stems from European invasion and colonisation.
The commission on Monday heard from the Commissioner for Aboriginal Children and Young People Meena Singh, along with stolen generation survivor Aunty Eva Jo Edwards.
AAP has contacted the Department of Health and Human Services for comment.
