The problem is that the django-admin wrapper chose the python3 version, but karaage.tests.settings is only available in Python2, even though I have python3-django installed.
See bugs #755341 and #755321.
Looks like code is trying to run django-admin as a python script, allows it to specify which version of python to use.
Only thing is, it isn't Python. It is now shell. This allows automatic choosing of which Python version to use.
Unfortunately, it might be more important being able to manually specify which Python version to use.