For temporary visas (e.g., for tourism or business), the most common reason for refusal is that the visa officer doubts your intention to leave the country and return home after the authorized stay.
However, the Australian visa subclass 186 is a permanent resident visa. This means that the usual concern about leaving after the limited authorized period of stay does not apply, as your intent is to stay in Australia permanently. Consequently, past temporary visa refusals generally do not negatively impact applications for permanent or long-term renewable visas.
WITH ONE BIG EXCEPTION: fraud or misrepresentation.
A record of fraud or misrepresentation makes your application fundamentally not credible.
For Schengen visas, "not reliable" is not considered fraud or misrepresentation. It simply means the visa officer has doubts on your honesty, which is different from believing you to be lying.
Going back to your first question:
Is it mandatory to state that "my visa was refused" during the application? What happens if I don't?
If you are asked to declare past visa refusals (Australian permanent visa applications generally do ask for past visa refusals), you must do so. Failing to declare it constitutes fraud and misrepresentation, which is an offense and can lead to a ban from Australia and make your future visa applications much harder (especially to US/Canada/New Zealand/UK). Even if not discovered during your application, misrepresentation can be grounds for canceling your permanent resident status and, if you naturalize, even your Australian citizenship, as they would be based on a false foundation.