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The teacher from Westlake Boys High School had allegedly been accused of telling students to go back to their own country, Fairfax reported.
There were also suggestions that European students had punched a Chinese student and that footage had shared on Chinese social media platform WeChat.
Principal David Ferguson confirmed that the teacher's "insensitive" comment had been "dealt with", Fairfax reported.
He was also aware of the punch portrayed in the video and a disciplinary process was under way with the alleged bullies.
"We have been working with the family of the student involved and are continuing to offer our support," Mr Ferguson said.
"Similarly, an occasion involving insensitive comments allegedly made by a staff member has also been dealt with, and all staff have been reminded of their duties around fairness and tolerance."
Mr Ferguson said his school had high expectations for its students: "Our goal always is to provide a safe and inclusive environment - based on respect for all cultures - so that all of our students without exception, can be successful."