The inquiry also called for the Australian Institute for Aboriginal and Torres Strait Islander Studies to be moved from the Acton Peninsula to the parliamentary triangle.

Chairman Liberal MP Ben Morton said it said it was a shame the only Aboriginal representation inside the parliamentary triangle was one of protest at the tent embassy. The tent embassy has been a long-running source of contention, with periodic attempts to move the temporary campsite from its prominent location in front of Old Parliament House.

But Mr Morton is not pushing for the removal of the tent embassy. He told the Canberra Times a relocated institute would complement the protest site.

“There’s no recommendation to replace the tent embassy,” Mr Morton said, after releasing the report of the parliamentary inquiry into Canberra’s national institutions on Wednesday.

The committee received multiple proposals for new institutions. It opted for a natural history museum,  recommending the federal government develop a business case for it.

Mr Morton said the museum would serve as a place for visitors to learn about Australia’s unique biodiversity.

“A natural history museum is worthy of further investigation, to share the story of Australian biodiversity, flora and fauna, minerals and our natural environment,” he said.

“A variety of STEM-based institutions in Canberra is becoming a drawcard for tourists and students.”

The ACT government expressed support for the natural history museum.

The Australian Institute for Aboriginal and Torres Strait Islander Studies chief executive, Craig Ritchie, backs moving the institute to a more central location.

“We’ve been calling for that for some time,” Mr Ritchie said.

“Our position is that the tent embassy is there, and says something about advocacy and agency of Aboriginal and Torres Strait Islander people in pursuit of our rights.”

Mr Morton said the new institute could serve as a national resting place for repatriated remains that could not immediately be returned to ancestral homes.

“We have a rich Indigenous history and culture and language and art, and we need to educate others in that rich history and it should be in the parliamentary triangle.

“I’m impressed with the work of the institution in capturing Indigenous languages, but if you’re going to conserve something, you don’t hide it behind closed doors. You have to make it available to the public.”

The report criticised the Museum of Australian Democracy at Old Parliament House, saying it had crept from its original focus.

It said Old Parliament House should be used instead as a working extension of the current Parliament House.

It also recommended the museum of democracy's objectives be reviewed.

Mr Morton said while the museum worked well at targeting school children in learning about the democratic process, other demographics were being left out.

“We would like to see it expand their offerings from school students to the general public, both in formal programs and walk-up programs,” he said.

“[The museum] is not a think tank, it’s not an academic organisation. It plays an important role in the education and the understanding of our democracy.”

The committee said Canberra’s national institutions had been subjected to budget pressure over “a significant period” and that smaller institutions had been disproportionately affected by efficiency dividends.

It called for setting a threshold amount of smaller institutions, where the dividends would be excluded or reduced, a similar recommendation made in a 2008 joint committee report.

Mr Morton said the ability to invest further money would depend on budget management from the institutions.

He said a more strategic and united voice for funding from the different institutions would strengthen their cultural capabilities.

“We have to put behind us a silo approach to advocacy. The national institutions together are a collective record to tell our Australian story, and that’s extremely important,” he said.

“All the institutions have a role in storytelling and they need to be in one voice.”

A shared approach would see a shared collection and storage facility set up, with a shared exhibition space also flagged as a possibility for collaboration.

The shared storage facility was an idea previously suggested by National Museum of Australia director Mathew Trinca, who welcomed the report’s findings.

“A joint effort between the national institutions picks up on something that we’ve long advocated,” Dr Trinca said.

“A joint facility for collection storage that might be shared among the institutions seems to be me to be a powerful recommendation, to be able to work together while also maintaining separate character.”