City of Melbourne Lord Mayor Nicholas Reece on Monday told the commission social cohesion had frayed in Melbourne, home to Australia's largest Jewish population, since the October 7 attack by Hamas on Israel.
A spike in anti-Semitic graffiti and other materials in the city prompted the council to introduce a system that allowed members of the public to report offensive material at any time of the day or night, he said.
Contractors then aim to remove the material within one hour.
Mr Reece said 800 to 1000 pieces of anti-Semitic material, covering almost 4000sq m, had been removed since the initiative started about two years ago.
SydWest Multicultural Services head Elfa Moraitakic also appeared before the commission on Monday.
Ms Moraitakis said the Bondi attack had created unease in western Sydney's Muslim community.
She said some Muslims, particularly women who wore a hijab, stopped going to work due to fear.
"Post-Bondi, unfortunately, specific communities were used as scapegoats," Ms Moraitakic said.
"They were used as part of the political debate and this made people very uncomfortable."
Advocates and coalition MPs have been calling for the commission, which began its final week of hearings on Monday, to be extended, saying it has not gone far enough in interrogating what led to December's Bondi Beach attack.
NSW Premier Chris Minns on Monday threw his support behind the push, telling reporters an extension of hearings "by a couple of weeks" would be money well spent.
"We are using this royal commission to get to the fundamental truths of what happened on the day, and also what happened in the lead-up to that day, particularly around anti-Semitism," he said.
Mr Minns said he would be comfortable giving evidence in the commission if he was called to do so.
An online petition calling on the government to extend hearings has gained more than 2000 signatures.
The coalition's home affairs spokesman Jonathon Duniam also backed an extension.
"If the royal commission is to be able to provide us a full and frank assessment of where we as a country went wrong, they do need to canvass all areas of policy and decision-making, state and federal, and make sure we get it right," Mr Duniam told ABC Radio on Monday.
Asked at a press conference on Monday whether the royal commission had curbed anti-Semitism in Australia, Prime Minister Anthony Albanese said he would allow the inquiry to do its work.
"Anti-Semitism has no place in Australian society," he said.
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