The slur against the year six student comes on the back of the Islamophobia Register Australia reporting a flood of activity since the outbreak of the Israel-Hamas war on October 7.
"We have a successful multicultural, multi-faith community in this state that's come about because of generations of understanding, working across faiths and a general recognition we live in the best country in the world," Mr Minns told reporters on Monday.
"So if there are overt acts of racism in our community, that's a massive concern for me."
Premier Chris Minns said NSW had a successful multicultural, multi-faith community. (Bianca De Marchi/AAP PHOTOS)
While the school incident involved a Christian boy, executive director Sharara Attai considered it an example of Islamophobia due to a likely perception of "Muslimness" in the perpetrator's mind.
She compared it to an uptick in abuse towards the Sikh community immediately after the September 11 attacks in 2001.
The case was in addition to the 227 cases reported to the register in the seven weeks since October 7, a 13-fold increase in reporting rates.
Recent cases in the register include the harassment of worshippers at mosques, Muslim women being spat at and verbal abuse.
"But we've heard of a range of incidents that were not reported to us," Ms Attai told AAP.
"This is in line with research that says Islamophobia is significantly under-reported."
The school incident reinforced concerns in the Palestinian Christian community that some schools were forgetting them.
Prayers for Israel, which failed to mention Palestinians despite some students having Palestinian backgrounds, sparked a letter to Catholic and Anglican schools.
"We kindly encourage your school to consider including prayers for all people including Palestinians in the school's activities and gatherings," the letter by Palestinian Christians in Australia reads.
"Our shared mission is to foster a sense of unity, tolerance and peace, mirroring the values upheld by our faith."
There are concerns Palestinian children are being subject to bullying and harassment. (Dan Himbrechts/AAP PHOTOS)
Board member Sally Asfour said media and government figures had failed to properly show what Palestinian people were enduring.
"Our children are being subjected to bullying and harassment in Australia as a result," she told AAP.
NSW Labor MP Julia Finn last week highlighted how "despicable" incidents of abuse in Australia were compounding trauma for Palestinian Australians with close ties to Gaza.
That included Sydney relatives of those killed by an Israeli air strike that damaged St Porphyrius Church on October 19.
"These incidents are small in number but are really distressing for communities that are already traumatised," the Granville MP told parliament.
A similar rise in anti-Semitism has been reported among Jewish groups since Hamas fighters massacred 1200 people and took about 240 hostages on October 7.
Subsequent shelling of the densely populated Gaza Strip by Israel has killed almost 15,000 people including about 6000 children.
There are hopes a four-day ceasefire that began on Friday will result in the release of at least 65 Israeli and foreign hostages and 150 Palestinian prisoners.
6°C