It really wasn't that offensive though, it was typical boomer humour. Stuff I've heard from a bunch of people making jokes about those jeans that come with pre-installed holes in them. It's insane, you spend $300 on jeans and they're full of holes, is there any wonder an ultimate boomer like Jeff Kennett would make the same remark about them?
To me it's clearly not racist from Jeff, just him treating her as he'd treat anyone else wearing those sorts of jeans.
I could see my dad saying something similar to my daughter.