The biggest problem with these sorts of arguments is that they invariably ignore the elephant in the room the customer.
It's no bad thing imho to look after your own first, that should be the default position and in a way Australia actually does do that for its airline passengers already.
If you subscribe to the view that artificial restrictions are beneficial to the country as it protects industries and companies on the basis of a locals first policy then you have to accept the trade off that those same industries and companies have no real incentive to remain as competitive or to compete as vigorously. If modern industrial history has taught us anything it's that governments and their various ministries and quango's are utterly hopeless when it comes to operating efficiently along side the private sector, moreover the natural progression tends to lead to bloated high cost "businesses" that tend to drift out of touch with reality.
The trick if there is such a thing is to find the right balance of regulation v free market practises whilst ensuring that competition is healthy rather than one sided.
The reality as it stands right now is that in terms of airlines and international travel both QF and VA have been less than enthusiastic about risk and strategy and have instead focused far more on their domestic operations.
The customer in turn has far more choice than they ever have had and at a price that in real terms is far more affordable today than at any previous time.
If some think that it's in the national interest to restrict and block outside competition then that's an argument for the political arena, it's a concept that works in some regards in the US due to the numbers who live there, however in a country of less than 25 million at the arse end of the world that relies on significant amounts of external trade and inbound tourism it's a mindset that will lower standards of living and merely benefit a small fraction of the local population.
The other question I'd ask would be to those who feel that things should be restricted etc is, how many Pax do QF and VA now carry verses when there was less competition? and how does that compare to the numbers in terms of revenue now versus back then? (Time period to look at of your own choosing)