A University of Western Australia study has found that people who stream the flag from their cars are more likely than others to hold racist attitudes.
Several years ago the promoters of Sydney's Big Day Out stoked the ire of former Liberal Prime Minister John Howard by trying to ban the flag from the concert.
Promoters had been outraged by the use of the flag by racists during the anti-Lebanese Cronulla Beach riots, and its later adoption as "gang colours" and "racism disguised as patriotism" during the following Big Day Out a month later.
Lively debate on the subject has continued on the internet.
Yesterday the Rise Up Australia Day Party - motto, "keep Australia Australian" - urged all Australians to fly the flag as a symbol of all that Australia meant.
The party is led by Daniel Nalliah, director of the right-wing evangelical Catch the Fire Ministries, who regards Victoria's Black Saturday fires as God's punishment for abortion laws.
The party opposes multiculturalism, Islam and homosexuality.
"This party is totally committed to protecting the Australian way of life and our Judeo-Christian Heritage upon which Australia was founded," Nalliah said.
Now a team led by University of Western Australia sociologist and anthropologist Professor Farida Fozdar has found that 43 per cent of people flying the flag at last year's Australia Day fireworks in Perth agreed that the defunct and discredited White Australia Policy had protected the country from the kind of harm migration had inflicted on other nations. Only one quarter of the people who did not fly the flag felt the same.
More than half of the flag-fliers feared the nation's culture and most important values were at risk (compared to 34 per cent of non-fliers), one-third believed the only true Australians were those born there (22 per cent), and 55 per cent said migrants should leave their old ways behind (30 per cent).
Internationally-recognised Sydney neurosurgeon Professor Charles Teo, who said that during his childhood he did not spend a day without being jeered or mocked because of his Chinese heritage, said that while racism had diminished it had not disappeared.
In this year's Australia Day address yesterday, Teo said a visiting Indian colleague had been spat on in the street, and that it was incorrect and naive to say there was no anti-Arab or anti-Indian sentiment: "Just ask someone of Middle Eastern or Indian appearance."
He said Australia was a great country, with the foundations needed to become even greater, a country that was culturally and socially sensitive and which acknowledged its responsibility both to its own people and to less fortunate neighbours.
"I would like to see this Australia Day as a turning point," Teo said.
But Australia Day has other problems.
A study by the Victorian Health Department VicHealth and the Turning Point Alcohol and Drug Centre has found that the national celebration is the worst public holiday for alcohol-induced harm among the young.
More under-25s need emergency medical treatment for drunkenness, ambulance callouts double, and presentations at emergency departments increase by 59 per cent.
Assaults requiring medical treatment also double.
Australia Day is second only to New Year's Day for assaults across all age groups.
Lead author Belinda Lloyd, of Turning Point, told the Age that the summer months and Fridays and Saturdays were peak times for alcohol-related harm in Melbourne, but researchers accounted for those factors in reaching their findings.
VicHealth alcohol programme manager Brian Vandenberg said it would be easy to draw the conclusion that the combination of a public holiday, nice weather and the opportunity for people to get together with friends provided the ingredients for excessive drinking.
"That explains part of this story, but on a deeper level it reflects the problem we have with the cheap price of alcohol, the availability of it, and the promotion of drinking in Australian culture," he told the Age .
"It's a bit embarrassing and a bit sad that many spend Australia Day filled with alcohol rather than national pride," Vandenburg said.
"Others are spending their Australia Day dealing with drunken idiots in hospitals or police lock-ups, or drunk drivers on our roads."