Couple thoughts:
Australia is currently a bit short on water, but probably could have more people if it imported it's food instead of growing it locally, since about 65% of it's water is used for agriculture. Also, more sophisticated water use to minimize waste (see, Israel) could substantially decrease the amount needed by agriculture and to a lesser extent by urban populations: however, even in a "best-case scenario" where Australians import almost all of their food and don't bathe much, I have trouble seeing them doing as much as tripling their current population to 60-odd million. That's not a wank, just a mild swelling.
For a true wank, Australia must be the center of some sort of extended empire, as in Jared's scenario, only more so. If Australia is European-settled, then it's probably the center of some sort of "empire in exile" - if it was settled early enough by, say, Asians or Indians, it might be the original imperial center.
Of course, there's always super-aborigines...
http://www.uchronia.net/bib.cgi/label.html?id=mcmugreate
Bruce