Boyd,
No, you explained it fine, it's just that in your haste to denounce this (admittedly foolish) proposed legislation, have missed a couple of important points.
First is that you can always refuse to answer, even under Aussie law. Unless of course you are suggesting that the ATSB will employ hot lights, rubber coshes and truth drugs. The worst that can happen if you refuse to answer, as I understand it, is that you can be accused of committing an offence under this new (proposed) legislation, in which case you may be arrested. You are now in the custody of the Aussie police, and they most assuredly will have to allow a lawyer to be present. BTW, I am pretty sure that the right to silence is one of the fundamental human rights that the Aussie government has signed up to (as have most civilised nations).
Second, if you leave the CVR off until after an event has occurred (as you suggest), the CVR is unlikely to have anything incriminating on it, is it?
Thirdly, most legal systems recognise the concept of "reasonableness", as in "reasonable doubt" or "reasonable grounds". It would be a simple matter to show that it is not "reasonable" to expect a crew to turn on a CVR when in the midst of an emergency (unless doing so is part of an SOP).
Lastly, a foreign aircraft flying over (or landing in) Australia is still the sovereign territory of the nation in which it is owned and/or registered, and it is very, very difficult to enforce sanctions against foreign nationals (ie pilots), unless you can show criminal intent.
All the above is of course open to correction by an Australian lawyer, who may know better than me!
It's a crap (proposed) law, for sure, but lets not get too carried away...