Years ago, Australia had
A. For example:
ASCB - Canberra
ASSY - Sydney
At an ICAO meeting it was decided that a different system was going to be used to determine the location idenifiers.
The Australian respresentative put up his hand and asked, 'Why?'
Therefore, Australia got
Y.
In Oz the second letter generally relates to the FIR, although many places are a throwback to when there were more that the current 2 FIRs. For example:
YMML - Melbourne, in the Melbourne FIR
YPPH - Perth, formally in the Perth FIR but now in the ML FIR
Y