Department of Home Affairs senior bureaucrat Richard Johnson said the campaign would promote such values in a bid to counter other narratives circulating online or in the community.

"There is a strong intention that we would be promoting Australia's inclusive national identity, the fact that our modern national identity is based not in any particular ethnic heritage," he told a Senate inquiry on Thursday.

"We need to be cognisant of that history but it's more shaped around an inclusive national identity, around Australian citizenship and Australian values."

The campaign is under development as subject to decisions by government, Mr Johnson added.

The inquiry is looking at issues facing diaspora communities in Australia.

ASIO boss Mike Burgess wouldn't name particular countries, but said more than one nation was focusing on Australia's diaspora communities for their own national interests.

He said the communities weren't problems in themselves, but people could be exploited.

"Not because they're bad people but they can be exploited because of familiar ties and yes, on the odd occasion some individuals are good Aussies but they have an affinity for the motherland."

The spy agency boss reiterated the current risk of foreign interference was unprecedented.

He said the terror threat level remains at "probable" with the greatest risk of a lone actor being encouraged from overseas groups.

Islamic extremist groups remain the top threat, while there is a rise in extreme right-wing groups.

Mr Burgess said the rise of right wingers was not just home-grown but part of a worldwide rise borne from online connections.

"We're still working through why there is a rise at this time. There is a global trend of dissatisfaction with governments and society, that's an element," he said.

Mr Burgess also said the agency was changing its language so it refers to extremism in general rather than indicating a left or right political lean.

Government senator Eric Abetz's questioning of Australian-born Chinese Osmond Chiu on Wednesday left the academic shocked.

Mr Chiu spoke to the committee about the under-representation of multicultural communities in Australian politics, but was asked by Senator Abetz to condemn the Chinese Communist Party.

"I have no doubt that people will ask me why I refused. I did it because it was demeaning and I would not legitimise his tactic with an answer," he wrote in Nine newspapers.

"We have a serious problem if Chinese Australians cannot even appear before a Senate committee to talk about complex issues in a respectful manner, without senators demanding proof of their loyalty through some grandstanding condemnation of the Chinese government."

Australian Associated Press