Universities and media organisations have been urged to do more to restore trust in government and politics.
Australian National University vice-chancellor Professor Brian Schmidt laid out his concerns in a speech to the National Press Club in Canberra on Tuesday, ahead of his retirement after eight years in the role.
Research by the university found more than seven in 10 Australians think people in government only look after themselves.
And only a quarter think people in government can be trusted.
As well, trust in the mainstream media was below 50 per cent, and well below that of parliament and government.
"This suggests Australian democracy itself is in peril," Prof Schmidt said.
"Democracies don't function without trust. And democracies cannot evolve without trust. Clearly, something is not right."
He said the news media and universities had key roles to play.
"Nothing less than the health of our democracy rests on restoring public trust in their news providers, and in maintaining it in our universities," Prof Schmidt said.
"For universities, one of our challenges is the perception that we tend towards one side of politics. This is a dangerous and often untrue perception."
Part of the problem lay in the fact that, in the past, information relied on by government, universities and the media was highly curated.
News was reported "from a relatively small number of recognised media outlets that synthesised information from politicians and experts into a relatively homogenous understanding of the world", Prof Schmidt said.
"Today we have a 24-hour news cycle that covers every moment and every decision across a dazzling array of providers with paralysing efficiency," he said.
"It is fed by a quasi-infinite sea of information on the internet, catering to almost any preconceived notion on any subject, where everyone is an expert."
While it was a free country, democracy could not function effectively without evidence and knowledge, he said.
"An environment where invention and hard fact can sit indistinguishably side by side, one as credible as the other, is paralysing our democracy," Prof Schmidt said.
"It means people in power can survive by avoiding the wicked problems and instead make decisions on eight-second sound-bites rather than proven fact."
The Nobel Prize-winning scientist suggested media organisations - in order to be given specific rights and protections - be required to accredit against a set of standards, in the same way universities self-accredit.
He noted 40 countries representing 3.2 billion people would have elections in 2024, with huge potential for AI-generated misinformation campaigns to dominate, especially in the United States.
Prof Schmidt said the solution lay in education.
"Education is the single easiest tool we have to help," he said.
"It is the most powerful weapon to change and reshape the world.
"We know that trust in government increases markedly with education, as does essentially every other measure, from health to happiness."
Australian Associated Press