The Morrison government is facing pressure to take a tougher stance against the military leaders behind Myanmar's coup.
A cross-party committee chaired by Liberal MP Dave Sharma has investigated the military takeover and subsequent violent crackdown on protesters.
In a consensus report released Thursday, the committee calls for Australia to reconsider using sanctions as a means of pressuring the regime.
The report also recommends Australia consider offering permanent residency for Myanmar nationals.
The Australian government has so far resisted expanding targeted sanctions on military leaders behind the coup -
"[The military coup] has resulted in widespread loss of life and human tragedy and has entirely reversed the significant development gains Myanmar,” Mr Sharma, who is a former Australian ambassador, said.
“Australia has a clear national interest in the cessation of violence in Myanmar [and] the restoration of civilian [and] democratic rule."
The committee's report also says sanctions against military-linked entities should be considered, such as the Myanmar Economic Corporation and Myanmar Economic Holdings Public Company Limited.
Myanmar security forces have killed more than 860 people since the 1 February coup, according to the Assistance Association for Political Prisoners.
Australia has existing sanctions against five military figures who have been on the list since 2018 but has not expanded this to include coup leader General Min Aung Hlaing.
The government has argued applying further sanctions would risk restricting Australia’s influence over Myanmar’s military.
But almost 400 civil society organisations inside Myanmar have condemned the Australian government's response as “shameful inaction”.
As of March, there were around 3,380 temporary visa holders from Myanmar in Australia.
The government has indicated it won’t ask them to return to their country while it is still an unsafe environment.
But the report has called for the government to go further by exploring resettlement options.
The committee also calls for the Australian government to support regional diplomatic efforts to resolve the crisis.
It says it should work with the UN and through multilateral efforts to hold the military junta to account.
The Australian government has cut military ties with Myanmar and has also announced it will redirect aid away from government-related entities in response to the coup.
The committee said it welcomed this response, but also urges Australia to actively push for a global arms embargo against Myanmar.
Mr Sharma said the risk of a civil war in Myanmar had increased as a result of the military coup.
"Myanmar's rapid downward spiral should be of alarm to Australia and the region," he told parliament.
"The prospect of a failed state, gripped by civil war, in the heart of the Indo-Pacific. We do not want another Syria at the heart of Asia."
