Since neither BA or Qantas is state owned or controlled, I can't see that either government has a veto.
Would have thought from Australia's perspective they would, as I think that it would fall under the Australian Competition and Consumer Commission and their Trade Practices Act for being anti competitive. I think it is still the case back home in Oz that any merger would have to be blessed by them, before they would be able to merge.
I think if the merger does go ahead, alot of australian's wouldn't fly them any more. There was pride in flying with Qantas because it was Australian.