Well I'm not sure what is offensive about the term but I guess it's similar to how the british press used the "Paki" to describe any Asian immigrant (even if they wern't Pakistani) in the 1960/70s ish. It just comes from the press.
Wikipedia says...
Quote PakiThe term pommy, often shortened to pom, is commonly used by speakers as a person of British (English, Scottish, Welsh and Northern Irish) origin, in Australia and New Zealand. Although it was originally a derogatory term, it was ruled no longer offensive in 2006 by the Australian Advertising Standards Board and in 2010 by the New Zealand Broadcasting Standards Authority. Despite these changing views, some Britons consider the expression offensive or racist: for example, the community group British People Against Racial Discrimination was among those who complained to the Advertising Standards Board about five advertisements poking fun at "Poms," prompting the 2006 decision.'"
Now I don't personally think either "Pom" or "Paki" is particulary racist but I remember watching Cricket in Australia last winter and the Aussie test players were calling Pakistan "Paki's" in on air interviews. Imagine if that happened here....the daily mail would explode and badger those using the term into an apology. That small thing just shows you how different the two countries are.
