Green’s Dictionary of Slang

(Aus.) a Greek or Italian immigrant; cite 1941 ref. to WW2 enemy.

1941		West. Australian (Perth) 12 Apr. 4: When chasing the Rice and Sagos down / The flaming desert from town to town.
1957		J.M. Hosking ‘America, Yes, Australia?’ Aus. First and Last 123: We call them New Australians now; once we called some Dagoes, / Others Balts and Squareheads, Pongoes, Grills and Rice and Sagoes.
1983		R. Aven-Bray Ridgey-Didge Oz Jack Lang 41: Rice and Sago Dago.