Although the Japanese never planned to invade Australia, they did plan to isolate it from the rest of the world and perhaps, bully it into giving up the war. As part of their strategy, they landed troops on the then-Australian territory of Papua and attempted to capture Port Moresby by going through the Kokoda Trail (or Track, if you're really that picky). However, this offensive was halted by an Australian-American force.
But what if the Japanese were able to capture Port Moresby?
Logistically if would be very difficult to hold. Kokoda is one of three divisional sized battles in this region.
Milne Bay would need to fall as well to get the ships through to Moresby. Remember the whole reason for the Kokoda campaign was the loss of the Battle of Coral Sea.
Japan would face a similar position to the British in Crete. The port is on the far side of the island and ships have to run through a narrows then foreign dominated waters. Like Crete there is not an effective overland supply path.
A catch -22 situation. Ships need to reach Moresby to supply enough logistics to support an airbase,
and you need a working base to provide aircover to ships to get them through!
Assuming Milne Bay does fall, it becomes the linchpin to both the Solomans and PNG. From here air power can project west and south to allow sea supply Moresby, and interdict Allied sea traffic the Solomans.
The goal of isolating Australia is naive to me. Even if Japan were successful all the way south to NZ, shipping we just move further and further south. Japan is more and more "out on a limb", ready to cut off.
The only way I can see Japan successful is NOT TO attack the US, by-pass the Phillipines. They can kick Britain /Commonwealth when its down and get there imports of oil, rubber and so forth.
While not comfortable having a base beside your LOS, until the US re-arms, they do not have the assets for anything more than a "passive defence". No major attack are possible from here.
Without the USN, there would be no Coral Sea, no Kokoda, instead a landing at Moresby, Milne Bay cut off. No Midway, and Solomans falls totally to Japan.
IJN has all carriers and BBs to attack Australia were and when it wants. The real question is when the USA would finally break out of isolationism, under the threat of Japan's huge empire?