By way of comparison, here's what tracks cost in other iTunes music stores:
Europe (0.99 Euro) = A$1.58
Great Britain (0.79 Pounds Sterling) = A$1.86
Japan (200 Yen) = A$2.31.
So in Australia we're getting songs for less than in the UK, MUCH less than in Japan and only marginally more than in Europe. As for why: nobody knows. I assume it's all got to do with the negotiations with the music companies in various countries. In Australia I think that some of the other download services (such as Bigpond Music) offer music that's a little cheaper, but the copy protection and usage limits are much more restrictive.