Perhaps more than any other image, the spectacle of a ‘stolen' child - a child taken away from its natural parents by a malevolent state authority - crystallises the widespread sense that the modern world is wracked by, even defined by, pervasive trauma. And this is so not only in Australia, with its shameful history of the Stolen Generations. In the Austrian director Michael Haneke's film Hidden, all the nameless foreboding that is built up around the central bourgeois-French character - just what did he do to that Algerian pal of his back in the early '60s? - comes down to a simple but devastating sight: a child being placed in a car and driven away, bound for state care. It is as if we have all been unconsciously seeking an image which could take all the big-picture issues of the past century - all the wars, massacres, exiles and imprisonments - and distil them to the point where we can best understand them, where they touch upon the most personal and intimate of experiences: family life.

Although you may not have heard much about it since its film-festival premieres last year, Margot Nash's Call Me Mum is among the finest of recent Australian films, and certainly one of the most affecting and resonant. It will appear on SBS on 8 July, and television is, in many senses, its most natural home: like Alan Bennett's TV works, it is shaped as a series of interwoven monologues addressed straight to camera. Yet Call Me Mum can also stand on its feet as a film projected in a cinema, thanks to the careful, subtle, intricate stylisation brought to the project by an ace team including cinematographer Andrew de Groot, editor Denise Haratzis and composer David Bridie.

Five characters are about to meet. Two are on a plane: Kate (Catherine McClements) and her Torres Strait Islander foster son, Warren (Dayne Christian). Kate is bringing Warren to his biological mother, Flo (Vicki Saylor), who is slowly dying in a Brisbane hospital. Kate's parents, Dellmay (Lynette Curran) and Keith (Ross Thompson) - ‘Dellkeith', as they are collectively known - also await the arrival of the pair, although they bear them less goodwill than Flo.

Call Me Mum: there is a lot hidden in that simple title. Warren has two mums. Kate has rejected and shut out her mother for many years. Flo hopes that not only Warren but also Kate will call her Mum. Both Dellmay and Keith reminisce about their respective mothers. Certain phrases - about ‘marrying down', for instance - recur uncannily from one story, one history to the next. Everyone seems connected, in one way or another, by blood ties or shared experience, and yet everyone seems so painfully divided from all the rest, and so alone. The monologue form gives an artistic shape to this omnipresent solitude.

Kathleen Mary Fallon is among the most talented writers in Australia. Although inspired by her life as the foster mother of a Torres Strait Islander, Call Me Mum is not a confessional or autobiographical piece. If it is at all therapeutic, that is because, as Fallon attests, she needed the "freedom of fiction" to create some space around her experience and make sense of it. Fallon is not in search of easy resolutions: some sentimental redemption for all the characters, united in a facile allegory of utopian reconciliation. Closer in tone to a film like Atom Egoyan's disquieting The Sweet Hereafter, another drama that maps social disintegration onto family despair, Call Me Mum stays tightly fixed on emotions of mutual hatred, suspicion and bitterness. For Fallon, the question of the piece is, "As Australians, would we rather die than change our story; would we rather kill than have it genuinely challenged?"

Warren, who has suffered various waves of physical and mental retardation, is no innocent victim whom you can simply clasp to your bosom and love. Kate, who does indeed love him, has a dozen unflattering nicknames for Warren; he's noisy, smelly, uncontrollable, sly, manipulative. He even sends the unsuspecting passenger next to him on the plane fleeing in no time. What has brought all five characters together in this story is a TV show on which Warren appeared: egged on to ‘out' himself as one of the Stolen Generation, he tells horrendous lies about Kate and what she has done for him. Then again, it must be hard for Warren, after all he has been through, to tell the difference between inner fantasy, outer reality, and everything he is being fed "intersubjectively", especially when the media come calling.

At the other extreme of social experience is the home and hearth of Dellkeith. There is a touch of Barry Humphries satire in this portrait of white Australia: pastel colour scheme, furnishings from the '50s, tea sets and doilies. If there is an obvious (perhaps too obvious) villain in the piece, it's Dellmay: Lynette Curran relishes every ghastly thing that comes out of her character's mouth, while the passive-aggressive Keith sits in the background and waves imaginary danger signals to Kate and Warren in their descending plane. But Keith, finally upright in his digger's hat, gets to voice the most devastating speech of the piece: an ironic "I'm sorry" chant that burrows right inside the conservative values of ordinary Australians. Like much of what we hear in the film, it's funny, frightening and confronting at the same time.

Call Me Mum covers a lot of ground in its mere 76 minutes. The stories of the past tumble out, taking in a large array of cultures and situations. Like everyone in the film, Flo is mixed up and fucked up: sex, booze, violence, social exclusion, failure to be a "good mother". She speaks of what it means to be both an Islander and Malay: to one group she is an "outcast", and to the other she is a "dirty Islander". Fallon soft-pedals none of this difficult material. The quasi-Joycean wordplay that she perfected in novels such as Working Hot here slips unobtrusively into everyday speech: Warren mistakes "genocide" for "genderslide", and the infinite Australian capacity to prefix every intimate acquaintance's name with "poor old" assumes new and awesome meaning.

But none of this would work as well if Margot Nash (whose previous feature, the excellent Vacant Possession, is over a decade old) had not made it so thoroughly cinematic. It is no accident that women formed in the radical movements of the '70s, such as Nash, Sue Brooks - who was originally slated to direct Call Me Mum - Kathryn Millard and the New Zealander Gaylene Preston are, without a doubt, the most intellectual and artistically rigorous of the film-makers in our region. Here, Nash is able to postpone the thought in the viewer's mind that this is, after all, rather stagy material. She transforms each locale - plane, hospital, lounge room - into something subtly unreal, a kind of fantasy projection from out of the characters' heads. Music and other sound effects very quietly, in an almost ghostly fashion, underscore allusions and emotions hidden in the text. The actors, under Nash's guidance, manage to form an ensemble, even as they inhabit their own, lonely worlds, and hardly ever get to perform with each other. Even the central image that haunts the entire proceedings - Warren as an archetypal stolen child, either in the long-ago past or again in the imminent future - is given an unreal, dreamlike aura by Nash, as if it could just as well be a disturbance arising from our collective memory as an actual event.

I like Call Me Mum best for its first hour, before the various threads finally come together cataclysmically. How fascinating and risky it would have been to leave the entire piece suspended, on the brink of narrative conclusion (as presumably Fallon's prior theatrical version did), before the various characters either encounter or fail to encounter each other. That is the only touch of melodrama in what is otherwise a cleverly minimalist piece - and Australia has hardly kept pace with the great art cinemas of Asia and Iran in the conquest of screen minimalism. Then again, how is it possible to tell any mixed-race story in today's fraught Australian society without at least some stain of melodramatic loss, crisis and trauma?