The 2026 McKinnon Index, released on Monday, found trust in state and territory politicians had declined by 6.1 per cent since 2025, while their faith in federal politicians was down 5.4 per cent.
Trust in federal and state and territory governments were also down by 4.5 and 3.7 per cent respectively.
The survey about Australians' attitudes towards democracy, which is only in its second year, was conducted before the alleged targeted attack of federal MP for Indi Helen Haines in October.
Dr Haines, 65, was severely injured after being hit by a vehicle while loading up her car in front of her electorate office in Wangaratta, Victoria.
McKinnon's interim head, John Thwaites, said the results showed the connection between people and politics was under increasing pressure.
''Whatever our politics, an attack on an elected representative is an attack on every Australian's right to be represented," he said.
"The respect we show each other in public debate has never mattered more."
There was also a drop in satisfaction with the way democracy works.
For the first time, fewer than half of Australians believed the political system allowed people like them to have a say in what the government did, according to the results.
The top reasons cited for a lack of trust in government were broken promises, dishonesty, and it being out of touch.
''People need to know their voice matters,'' Mr Thwaites said.
''They also need to see leaders acting with integrity, keeping their promises and delivering outcomes that make a difference to their lives.
"Both matter if we want to rebuild trust."
There was a particular shift in attitudes among young men, with support for democracy falling 10 per cent among men aged 18 to 24.
That demographic also felt there had been a significant decline in their ability to freely express political opinions, and more than a quarter said extreme measures like violence were justifiable to advance political causes.
But the findings revealed Australians' faith in democratic institutions had grown or remained stable.
Confidence in the Australian Electoral Commission was up 2.7 percentage points, while faith in the courts and judicial system was up 1.6 points.
The institute's executive director of democracy, Tom Mooney, said it showed Australians clearly wanted the system to work.
''There is enormous support for strengthening (democracy),'' he said.
''The task now is to turn that support into practical change - so people feel heard and can see their governments delivering.''
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