Really? Countries otherwise known as states are not "races" of people. Australia has different entry rules for different states, again not racist. Is racism specifically illegal anyway under ICAO or the Civil Aviation Act?
Yes true however in diplomatic circles it is used as real threat because they know our government never wants to be called racist as it is a easy headline grab with the media. You only have to read an ATSB report involving a foreign carrier to see how scared the government is of being accused of racism, whether it is true or not.
If a foreign government came and started pushing for domestic regulation for a local airline like the deal Canada just got what are CASA going to say? If they say no then it gets wheeled back around into a diplomatic issue. Alternatively an Australian Government may want a big foreign airline in here to shake up the locals a bit and get out of making some sort of 'passenger bill of rights' arrangement. End of the day I wouldn't believe that the market here is big enough to warrant such a move but who knows, aviation business is hardly rational.