It is difficult to convey the deep emotion many Australians feel about the apology that is to be made to those indigenous Australians now known as the Stolen Generations, this Wednesday at 9am, as the first act of the newly elected Australian parliament. The national excitement around the event is palpable, with thousands heading to Canberra for it, and public screens being erected in most major cities for the live, national broadcast of the event.

Newly elected prime minister Kevin Rudd spent time last weekend with a Stolen Generation survivor, listening to her story. He has pointedly negotiated the wording of the apology with indigenous leaders but not the leader of the Liberal party. If Rudd's Labor government achieves nothing else, it deserves credit for this historic act which allows Australia to once more move forward.

Nor is it easy to explain precisely why a merely symbolic act has come to mean so much more than simply saying sorry, or how it has taken on the burden of the hope and despair of many Australians.

In the late 19th century the theory that the Aborigines were an inferior race that was doomed to die out became accepted as fact. But such faux science was threatened by the increasing number of children of mixed descent who, unaware of their superior bloodlines, took on indigenous ways and values. To wash the blackness out, a prejudice was raised to the level of a supposedly compassionate act and became known as the policy of assimilation.

In its name it is officially estimated that, over the course of the last century, over a hundred thousand indigenous children were taken from their families and tribes - often forcibly - and raised in institutions and foster families where they would pointedly not be allowed their language or culture. These children were the Stolen Generations. How many lives - of both those taken and those left - were blighted and destroyed will never be known.

In 1995 the Paul Keating Labor government commissioned an inquiry into the forcible removal of Aboriginal children. But by the time the report was tabled in 1997, John Howard's Liberal party - widely seen in its early days to have had truck with a racist far right - was in government, and empathy for the dispossessed was in short supply.

The report concluded that the children and their families had endured "gross violations of their human rights" and described the forcible removal of indigenous children as "an act of genocide, aimed at wiping out indigenous families, communities and cultures". The report recommended compensation and an apology by parliament.

The report's detailed stories of suffering - the sometimes violent removals, the beatings, floggings, sexual abuse, lies; and the inevitable harvest of human misery - the suicides, the alcohol and drug abuse, the violence, crime, the descent into hell - shocked and moved the nation. There arose in Australia a great movement for reconciliation.

Millions marched for this cause. Sorry Days were held, with extraordinary town hall meetings where many wept, and Sorry Books filled with individual Australians' own apologies. There was at the heart of the reconciliation movement a sense that it offered all Australians a necessary and cathartic rapprochement that might enable the nation to finally go forward.

But for 11 years it did not happen.

John Howard, willing to apologise to home owners for rising interest rates, would not say sorry to Aborigines. He refused to condone what he referred to as "a black armband version" of history, preferring a jingoistic nationalism. He promoted a revisionist school of history that claimed the suffering of Aboriginal Australia had been grossly overstated. He went so far as to install one of that school's leading proponents, Keith Windschuttle, on the board of the Australian Broadcasting Commission.

I am 46. I have met Aborigines younger than me who used to hide every time anyone official came round their camp, for fear of being taken away. I met a man in Darwin jail who was two years younger than me. He had been stolen from his mother at the age of three, sat in the back of a truck and driven for three days through the tropical heat to an institution in Darwin.

I continue to be astonished by what I learn about the appalling racism my country practised for so long. Only last year I discovered that in parts of Australia in my lifetime, white men could be jailed for cohabiting with black women. And yet so often I have only ever met with friendship, humour, and respect from those same Aboriginal people from whom I might expect anger and hate.

It is true that the apology will not alter the condition of Aboriginal people. The hurt won't end, nor the misery and inequality that sees indigenous Australians with a life expectancy 17 years less than non-indigenous Australians. But it is a fundamental and necessary step towards Australians coming together to address their national ills, such as the violence and substance abuse of remote indigenous communities, the poverty and unemployment of urban Aborigines, and of once more looking at the matters of a treaty, land rights, and compensation to the survivors of assimilation.

These are complex issues. But in just half a century, Australia transformed itself from an Anglo-Saxon colony into one of the world's most successful migrant nations. We did that; we can, if we wish, do this. Every nation sins. The measure of their greatness is their capacity to admit to them.

I recall a major concert in Melbourne in 2006 by Australia's leading indigenous musicians. The concert was in part inspired, lost, elegiac, overwhelming. At the end, the hall of 2,000 people rose and there was ovation after ovation. Huge waves of emotion buffeted the hall. There was a goodwill upon which a different country could be built. At that moment I realised it was never about the past. Why is it we Australians have been so frightened of who we are? Could it be that what black Australia offers is not guilt but the invitation to a future as diverse, as large and extraordinary as the songs played that night in that hall?

· Richard Flanagan is an Australian novelist whose most recent book is The Unknown Terrorist comment@theguardian.com