How to solve this conflict? RED DAWN FANTASY TIME!
Australia will be invaded by China, and the Chinese will stop for nothing, they need expansion territories and they can tame the interior with water projects so a billion or two Chinese can live there.
But with an unarmed Australia there will be minimal resistance, and I mean very minimal, not even the best of all of the Australian military can cope head to head with China.
Now I happen to have some loyalty to OZ, and if I saw invading Chinese I would do whatever I could to create weapons of mass destruction, but of course it would be viewed as being illegal by Oz laws. They have condemned themselves. Its a bloody shame that the real patriots have to be an underground, always fearful of authorities seeking the guns, but also being patriotic to defend the land from invasion.
Oh yeah they are idiotic morons. They will surrender in a heartbeat. And the people of Oz will suffer for it, except for the gun owners underground.
UPDATE: Commenter Ted Brist points to an even more on point young adult novel Australian version of Red Dawn with Chinese enemies and improvised explosives as weapons.
Someone needs to work on separating fantasy from reality.