Actually, this isn't new. This was one of the Labour party's policies before they even went to the election last year... It's just that most people never actually read a political party's policies, and wait for it to be spoon fed to them.
The thing that really shits me is that this was ALSO a Liberal (they're our Republicans) party policy. It was a bi-partisan thing between both majors' right wing factions, so it's rather hypocritical for the Libs to start baw-baw-bawing about it now that they're in opposition... But most people don't know that either, so it makes them look good.
Either way, in the end, it will become unworkable, and it will get taken down, because every damn PC magazine and Newspaper tech section in the country will simply start plugging proxy services.
You'll probably also see a rise in digital attacks on Government sites until it's repealed.
Aussie hactivists are some of the most active in the world.