Diversity advocates say a contentious clause protecting religious statements of belief would override people's other rights.
But representatives of the Catholic Bishops Conference argue the clause in the proposed discrimination legislation is necessary due to "hard truths" in religion.
On Thursday, the federal parliamentary committee on human rights began its second hearing on a religious discrimination bill controversially introduced to parliament in the final sitting weeks of 2021.
Representatives from business, church, education and diversity groups appeared before the committee in the first half of the hearing.
A point of contention with the bill is the inclusion of a statement of belief clause.
The clause says it will not be discriminatory for a person to say something they "genuinely consider to be in accordance with the doctrines, tenets, beliefs or teachings of that religion".
However it does not apply if the statement is malicious or threatening.
Australian Catholic University professor Rocque Reynolds said the clause was important because religions often had "hard truths" that were offensive to some people.
"Religions can have hard truths ... and people might find them offensive but they're not intimidatory or threatening," she said.
"We think the bill has found a good balance with that."
Melbourne Archbishop Peter Comensoli told the committee the proposed religious discrimination bill completed the suite of existing anti-discrimination laws.
Presbyterian church representative John McClean said the reality of living in a multi-faith community meant accepting different religions had different views.
"By its nature, religion requires statements and expression, so it's appropriate that be protected," he said.
But Diversity Council chief executive officer Lisa Annese said advocates were concerned the statement of belief clause would override protections of other rights.
She said the council supported people being protected from discrimination due to their faith, but did not want to privilege religious rights over others.
"This is an unprecedented intrusion into other jurisdictions by protecting expression of religious speech over acts of discrimination and creates different standards for statements of belief," the council said in a submission to the committee.
Women's health advocates say the proposed bill has the potential to impact people's access to health care.
Australian Women's Health Network member Dianne Hill told the committee the statement of belief clause would wind back hard fought freedoms.
"Our big concern is this bill favours religious beliefs that... will further undermine all the work that has been done to improve services for women.
Australian Medical Association president Omar Khorshid said there was "no doubt" access to health care that involves matters of conscience - such as abortion, IVF and voluntary assisted dying - would be impacted by the statement of belief clause.
"The AMA is concerned the bill doesn't clarify enough that professional medical standards should come first and foremost," he said.
"Our main point is we believe the professional standard for doctors should be what drives our practice rather than a law that would enable conduct that could be unprofessional or illegal."
The inquiry continues on Friday with human rights advocates, union representatives and public servants from the Attorney-General's department among those appearing.
Australian Associated Press