A teenage girl who stabbed Bridgette 'Biddy' Porter, 10, to death is on a last-resort drug for 'chronic and severe' schizophrenia, an inquest has heard.

The 14-year-old, known as XR for legal reasons, used her favourite knives to kill Biddy during a psychotic episode in Gunnedah, north-east NSW, on July 8, 2020.

She was charged with murder at the time, but the NSW Supreme Court found she was not guilty by reason of mental illness due to her then-undiagnosed schizophrenia.

The circumstances surrounding Biddy's death are now being examined in the Coroner's Court in Sydney to determine whether systemic failures contributed to the tragedy, or if XR's declining mental health could have been detected sooner.

On Thursday, the inquest heard that XR wrote a diary entry about an incident at school where she scratched a boy's cheek and punched him in the head. She wrote: 'Honestly, I wasn't going for his cheek, I was going for his eye.

'Who can you talk it through with? The answer is no one because I don't talk to anyone, I just write it down in violent stories.' 

Forensic psychiatrist Olav Nielssen was called as an expert witness to examine evidence about XR's behaviour before and after the killing, and about her eventual diagnosis.

Speaking about the now-20-year-old's current condition in a mental health facility, Dr Nielssen said XR is unlikely to kill again, as long as she keeps taking clozapine - a last-resort drug for patients who don't respond to other antipsychotic drugs.

He said XR will need to be medicated for the rest of her life, but that she is unlikely to reoffend if she were ever released into the community and monitored.

'The rate of reoffending by [mental health] patients is very low,' he said.

Dr Nielssen said XR's case is unusual because homicidal ideas are very uncommon with early-onset schizophrenia.

He told the inquest that he had examined 500 cases of child homicide in NSW and found two cases where teenagers had killed toddlers, but neither of them were psychotic.

'So it's extremely rare for a 14-year-old to develop psychosis and kill,' he said.

Dr Nielssen also said XR is the youngest homicidal schizophrenic the state has ever seen.

The inquest heard XR showed signs of mental illness from the age of 10 when she started self-harming, but her condition worsened over the next four years.

She started withdrawing from social contact, she became irritable, and her diary entries showed homicidal ideation with details about who she would kill and how she would do it.

Later on Thursday, a member of the NSW Department of Education gave evidence.

He was asked about the chicken incident at school - namely, when XR brought severed chicken legs and a beak to science class in 2019.

'She took out parts of a chicken and waved them around,' he said.

'Students were excited by this, and the teacher asked her to put them back in her bag, and she complied.'

He said there was no real concern for XR's well-being after the incident because the class had recently completed a dissection lesson, as is the standard for high school students.

XR told the teacher she got the chicken bodies from a cull at her family farm, and the teacher determined that was relatively normal for a student in a regional location.

The teacher told their superior, but no action was taken.

The school did not know XR had killed six chickens with a skewer, that she filmed the killings, or - as she later told her mother - that she killed the chickens instead of killing her family.

He was then asked about another incident at school where XR and another student were overheard talking about how they wanted to take their own lives with pills and alcohol.

Other students overheard the conversation and reported it.

When asked, XR and the friend told teachers they were joking and were not really suicidal.

The Department of Education employee told the inquest that XR and her friend should have been reported and referred to child welfare, regardless of any explanation the girls provided.

Asked about another incident when XR was involved in a physical fight with a boy at school on July 1, 2020 - eight days before Biddy's death - he said it was an assault that should have been reported.

XR was suspended for two days before the school holidays started. 

The inquiry heard that a school counsellor would have spoken with XR upon her eventual return to school after the holidays.

But she never went back to school. During the winter holidays, on July 8, she killed Biddy.

During the first two days of the inquest, XR's mother and father were separately asked a number of questions about their daughter's behaviour.

Both parents said the chicken incident didn't raise any red flags because they lived on a farm where animals were culled. 

They also said XR was only reprimanded because she didn't have permission to kill the birds, but not for the act of killing.

XR's mother was asked about one of her daughter's diary entries about a chicken that appeared to have been tortured. It read: 'When it finally died, I hid its body and continued the indulging activity each day.

'Such a shame I wasn't more discreet with the number of them I killed because Mum found out, or should I say [my little sister] came and she was shocked sh*tless. 

'It took so much willpower not to do the same to her.'

XR's mother told the inquest that her youngest daughter never mentioned seeing XR kill the chickens, and agreed it was likely XR had made that part up. 

Her mother was also asked whether she knew that her daughter had named her favourite knives Ray, Lou, Rue, and Storm.

She replied: 'My juicer's name is Juicy, is that a red flag?'

The inquest continues.