Meeb,
I am afraid that you are incorrect here. The Australian Government has no problem with dual nationality. I hold an Australian passport and I was born in Sydney, Australia. I also hold a UK passport (Courtesy of my father) and it still says I was born in Sydney, although now I am also a British citizen.
What the Australian govt will not let you do is leave Australia on a "foreign" passport. If you do, you have then deemed to have forgone your Australian citizenship.