Mr Sharma, a former ambassador to Israel, pointed to a diminished United States which is less interested in being a global leader and a more bullish China, in his call for Australia to be prepared to make tough decisions.

"We may need to pay an economic or political price - a trade opportunity foregone, a market missed, a bumpy period in diplomatic relations - in order to retain our freedom of action as an independent and sovereign nation, or to stand up for values we support," he told Parliament in his inaugural speech on Wednesday.

Mr Sharma, who wrested Malcolm Turnbull's former seat of Wentworth back from Kerryn Phelps this year, lamented the lack of responsible policy on climate change and called for tolerance for multiculturalism and the gay community that he said was clear in Wentworth. His electorate takes in Oxford Street and Bondi.

Mr Sharma spent 20 years overseas with the Department of Foreign Affairs and Trade in Bougainville, at the Australian Embassy in Washington, and as ambassador to Israel. It had taught him that nations were fragile, he said, with Australia's complacency one of its greatest risks.

Australia could no longer rely on its isolation, its alliance with the US, and a world order that guaranteed the rights of all nations.

Foreign actors could now attack from afar and Australia was vulnerable to "grey-zone operations".

"An adversary no longer needs to be able to physically reach Australia in order to coerce, threaten or influence us," he said.

In the South China Sea, norms such as freedom of navigation were being bluntly ignored. And the World Trade Organisation was being sidelined as the international trade umpire.

"Our strategic holiday is over. Our neighbourhood is getting tougher; the certainties on which we've depended for decades are no longer so certain; and we will need to rely more on ourselves, and less on others, in safeguarding our freedoms and our independence."

Mr Sharma called for a bigger focus on defence and national security and changes in the defence and diplomatic services.

As ambassador to Israel, he had served under four different Australian prime ministers - an instability that had not served Australia well, including its ability to develop policy on climate change, he said, suggesting four-year terms would see better policy.

He he had learned from Australia's most formidable public servants, including Dennis Richardson, Nick Warner and Duncan Lewis, and he hoped the public service continued to support leaders with such big intellects and forceful personalities.

Born in Canada the son of an Australian mother and an Indian father, Mr Sharma said his mother had died of breast cancer when he was 12. He met his wife Rachel 15 years ago; the pair married in the old Parliament House rose gardens.