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Why were many Aboriginal names kept for town and place names in Australia including one of the first cities Parramatta:

As a settlement developed, Governor Phillip gave it the name "Rose Hill" (now used for a nearby suburb) which in 1791 he changed to Parramatta, approximating the term used by the local Aboriginal people.

Considering that white settlers took Aboriginal people as inferior, why was this done in many places?

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Your question is a special case of the more general question why European settlers in many parts of the world used indigenous place names rather than making up their own. North American examples include many state names (Mississippi, Tennessee, Kentucky).

Here is the first chapter of a longer work discussing indigenous and European place names in Australia. From that document:

The earliest recorded Indigenous placenames are over 40 names recorded as placenames in the Sydney area (Troy 1994). One of those that Troy lists, Parramatta, is unequivocally an Indigenous placename that has been taken into the introduced system.2 Such incorporation of Indigenous placenames into the official introduced placenames set has been sporadic, as Monaghan (this volume) points out. The surveyor Thomas Mitchell's preference for Indigenous placenames is well known, and contrasts with some other explorers (but see Carter (1988:67) for discussion of his motives for using them). Later writers sometimes also expressed the desire to use Indigenous placenames. For example, Edward Stephens (1889:498) wrote in an essay on Aborigines:

In conclusion I express the hope that young Australia, instead of reproducing the names of all the counties, towns, hamlets, mountains, lakes, and rivers of Europe and Asia, will preserve the names which the aborigines of Australia gave to the distinctive features of their ancient home.

More recently, in 1986, in a speech at the Second National Nomenclature Conference Dorothy Tunbridge urged the importance of documenting the Indigenous placename networks, and of establishing an official body that would actively and systematically record Indigenous placenames, and also of reinstating the Indigenous placenames (Tunbridge 1987).

[above quote edited for spelling]

Based on that, it sounds like in the case of Australia, the use of placenames (indigenous or European) was up to individual explorers or surveyors. I would guess in the case of North America, it was often a matter of convenience as Europeans had to communicate with Native Americans as they moved into the land and the most convenient names to use were those the Native Americans were already using.

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