The grounds for CASA to refuse to issue a licence, or to suspend or cancel a licence, will include that the applicant or holder has an adverse security status.
If you refuse to pay the fee to have the check, you will be deemed to have an adverse security status.
Checkmate.
You are correct in stating that you can still fight the level of the fee – it's not set in concrete as yet. However, as with the legislation itself, there is no electoral or other political risk to the government in imposing the fee.
Perhaps we should revisit this in about 3.5 years…..