Worral,
ICAO standards are the standards decided on by the Chicago Convention not the Shanghai Convention, the Jakarta Convention or the Wagga Wagga Convention, i.e the Western World got together after WW2 to start to define standards.
Yes some are not compliant but that does not excuse the others.
So CASA got time to comply sort themselves out and were not 'grounded' i.e. Australian carriers banned from international airspace in the mean time. The rest of the world reading the ICAO audit might have been justified in calling for such an immediate ban - eg Indonesia.
SIUYA
There is a big wide world out there. If you want international air travel you comply with ICAO standards, or file your differences for approval. You get audited, if you don't meet the standards then other countries can refuse to accept your aircraft in their airspace. Indonesia by EU etc.
Cleve