I recall the A > Y code proposal being presented at a Victorian RAPAC, the reason given was Australia was running out of location codes (the "A" was shared with PNG and possibly some islands), and with electronic flight planning systems coming in including NAIPS & TAAATS there was a need for more and unique codes.
The reason only the first letter changed was given as simplicity i.e.AMML becomes YMML and the following existing three letter suffix location code remained unchanged, with no need to change NAVAID IDs etc. which in itself would have been quite an exercise.