State laws criminalising hate speech are being reviewed in NSW after ugly public incidents following the outbreak of conflict in Gaza.
But critics say existing regulations already go far enough and are not being effectively used to police illegal incitement.
Changes introduced in 2018 made it a crime to publicly threaten or incite violence against either an individual or a group based on their race, religion, sexual orientation or gender identity.
The offence carries a maximum jail term of three years and a fine of $11,000, but the crime has never been successfully prosecuted.
Premier Chris Minns on Tuesday said he did not believe the laws went far enough and were being reviewed to "ensure they're implemented in both word and deed".
"There's no point in having these rules and regulations and laws on the books if in the end they're not applied," he told ABC Radio.
"I don't think anyone with a straight face ... could make the claim that we've solved or there isn't racism or racial vilification in NSW.
"With a state as big as ours, there are going to be ratbags and bad-faith actors and if they go too far they need to be charged."
Religious organisations, including those representing Jewish communities, have complained the laws are useless in policing hate speech and called for an overhaul.
For the crime to be legally prosecuted, police need to get the approval of the Director of Public Prosecutions, which can add an administrative hurdle to the process.
Two convictions under the laws have been annulled after it was revealed police did not get permission from the DPP to launch the cases.
The premier's move follows ugly scenes at a pro-Palestinian protest outside the Sydney Opera House early last month following Hamas attacks that killed more than 1200 Israelis.
A small number of protesters at the rally, called after the state government decided to light up the Opera House sails in the colours of the Israeli flag, chanted anti-Semitic slurs.
But Opposition Leader Mark Speakman said the laws could have been applied to some of those at the Opera House rally.
"It seems to me that episode is not a failure of the law - it's a failure to let these ... events to happen in the first place," he said.
NSW Council for Civil Liberties president Lydia Shelly said she was concerned the Minns government was allowing faith-based organisations to direct public policy and law reforms.
"We already have criminal provisions outlawing the use of offensive language and prohibition against incitement to violence in NSW," she said.
"Speech that is controversial that falls short of the current legal threshold should not be criminalised."
On Sunday, an amendment to NSW civil anti-discrimination regulations came into effect, making it illegal to publicly incite hatred, serious contempt or severe ridicule against a person or group based on their religion.
The NSW Civil and Administrative Tribunal can order an apology or damages of up to $100,000.