I would like to add something
I would like to add something to this - and that is the fact that there IS talent here in australia, and there are passionate people, who are interesting in bettering their skills as game developers, whatever their job may entail.
The problem is in retaining them.
A person who grows steadily soon finds themselves without peers, soon realises the people around him are holding him back, an all the 'normal' things start to become more annoying and bothersome.
They seek to surround themselves once again with like minded folks, and they tend to repeat this process until ending up at places like blizzard, weta, ILM, sony santa monica etc
Its frustrating that we cant offer this kind of environment for our best and brightest and im really not sure how to change this.
The bulk of passionate and skilled Australian game developers are the ones who have worked overseas and know what it takes to produce a great result. They return for personal reasons and quickly become frustrated at the situation.
There are (or were) too many people who got straight into the games industry here without having to do some s__t kicker job that gives them some perspective, or who just don't appreciate that it's a privilege to be able to do this for a living. Production quality is clearly lower than average in Australia.
It's brutal, but I hope the current tough times drive all the dispassionate and laid back out of the industry, leaving it hungrier and more talented.