This has been at times an explicit (and always an implicit) element in some of the recent Cricket controversy and in that other one about Japanese whaling. My view is that Australians are no more racist — and of course like all generalisations this is suspect — than anyone else, perhaps even less so than some. See the recent discussion at Racism No Way on my Oz Politics blog.
Friday 11 January update
Back on 6 January I said: given Symonds’s own background and the connotations, given that, of “monkey” are, believe me, deeply offensive. Legal Eagle today has gone deeper: Monkey business no laughing matter. All this would change the question at the head of this post to “Are Indians racist?” Not that this is Legal Eagle’s question, but she certainly shows why “monkey” may be construed as no laughing matter.
On the other hand, my Indian informers tell me the word “monkey” does not necessarily have such connotations in India, where actual monkeys (and their behaviour) are everyday facts and thus enter the language quite often. See also my post And yet it really was, in many respects, a good and exciting game, that Second Test… The perils of ignoring cross-cultural communication factors, on both sides?