If you don’t want to use Aviation ID, I’d give Security ID in Geraldton a call. They are set up with Australia post to do the ID checks and are easy to deal with.
CASA was probably made to be an issuing body from the outset to cover GA requirements. It is strange that they were allowed firstly to contract out their operation and now to revoke it completely. I’d hazard a guess they were unable to comply with the IT security requirements introduced recently which are pretty stringent.
CASA did once put their ASIC processing out to tender but I believe it was pulled and given back to AIA.