"We have come a long way as a nation in terms of people treating each other with respect but sadly we have some people who just don't get it and who don't want to get it.
"Winston Peters needs to know he's not funny. His outdated rhetoric belongs in New Zealand's past, it has no place in New Zealand's future."
Dame Susan said she supported comments this morning by former Chinese Association chairman Stephen Young that Mr Peters' joke belonged in the past.
Around a third of complaints received by the Human Rights Commission related to racial discrimination, Dame Susan said.
"We still have a lot of work to do in New Zealand when it comes to treating one another with respect. There is still, quite clearly, a lot of work to do."
Mr Peters defended the joke yesterday, saying it wasn't racist. "It's called humour. I know that in Beijing they think it's funny, and so do I."
The comment also brought condemnation from Act Party leader Dr Jamie Whyte who said the joke wasn't funny, made no sense and Dame Susan should have resigned for failing to condemn Mr Peters earlier.
Dr Whyte and Dame Susan have been locked in a war of words and Dr Whyte called on her to resign after she labelled his comparison of Maori to pre-revolutionary French aristocracy "grotesque and inflammatory".
Dr Whyte said Mr Peters' joke was originally made by the Australian politician Arthur Calwell - a keen defender of the White Australia immigration policy.
"Mr Peters is an experienced Australasian politician. He must be aware of Calwell and his xenophobic policies.
"Repeating an even less amusing version of his joke is shameful."
ACT's deputy leader Kenneth Wang said the "weak racist joke" was not funny to New Zealand's Chinese community.
"Every time Mr Peters stirs up anti-Chinese feeling he gives racists in the community encouragement to attack Chinese.
"I have reports of Chinese women being abused in the street, young louts going into Chinese shops to abuse shop keepers," Mr Wang said.
"These statements by Mr Peters are very hurtful to New Zealand's Chinese community.
"Mr Winston Peters is well aware that he is playing the race card. My advice to my fellow New Zealanders is it is time Mr Peters was retired."
Mr Wang said today there was no comparison between Mr Peters' joke and a billboard he erected when campaigning for Botany in September 2008 with the slogan; "vote Wang, get Wang and Wong".
"I think that's totally unrelated," he said. "Of course there was no double-meaning."
At the time, Mr Wang explained that because National's candidate Pansy Wong, who was standing against him, had a "safe" list position, she would be returned to Parliament regardless of whether she won the electorate or not.
The billboard prompted Ms Wong to complain to the electoral commission. She said by using her name on his billboards, Mr Wang was effectively making her accountable for his election spending.
Her complaint prompted Mr Wang to issue a press release titled: "Wong is Wrong, Says Wang".
"I don't think there is any comparison," Mr Wang said today. "Same words, but different nature."