on he checkout page, populate the state lists with the Australian States you wish to offer.
then open the webassist/ecart/checkout/js/paymentoptions.js file, and find the wa_countryChange function.
in that function, change the line:
if (document.getElementById("Country"+index).value == "US" || document.getElementById("Country"+index).value == "") {
to :
if (document.getElementById("Country"+index).value == "AU" || document.getElementById("Country"+index).value == "") {