Of course, if implemented, this would lock out anybody who uses an unsupported operating system for which the government hasn't made available a version of its Green And Gold Dam software, not to mention the scope for abuse. Imagine that, a year later, a law is quietly passed and the software updated to search users' hard drives for images that might be pornographic and forward them to the police, in the guise of hunting down paedophiles, or for text documents that might conceivably be "terrorist materials". Other than a few people being raided for possessing nude images of small-breasted models or similarly suspicious materials, all of a sudden, the police have a copy of everyone's private photos and other files; it's a good thing that the Australian police are renowned for their incorruptibility, and neither individual officers nor the police forces would ever abuse such sweeping powers.
Of course, once the software is, by law, on everyone's machine, the possibilities don't end there. In the age of the Long Siege, it's not unlikely that security agencies would have special powers to use this in a targeted fashion to go after persons of special concern (which, in the eyes of the Murdoch tabloids and their readership, means bloodthirsty paedoterrorist extremists who should all be locked up, but in reality is likely to mean environmental protesters, social-justice groups and anyone who looks suspicious). If ASIO or the AFP can surreptitiously modify files on computers at, say, Greenpeace or the Greens, think of the COINTELPRO-style hijinks they could get up to; changing the plans of protests, planting evidence that key organisers are informers, or just disrupting campaigns at key moments. And so, as if by magic, protests fizzle, media campaigns fail, opposition groups disintegrate in acrimony, and Australian democracy becomes a lot more efficiently managed. Confound their politics, indeed.
Of course, the Green and Gold Dam is by no means a done deal. Perhaps it's a proposal which will die, recognised for its heavy-handedness and unfeasibility. Or perhaps it's an ambit claim, to make the government's existing plans (the national firewall and ISP-based surveillance infrastructure) seem more moderate by comparison.
Apart from the sheer scope for abuse, what strikes me is the plain technological ignorance of the discussion. After all, what is a "computer", under their terms? As far as I can see, if such a plan were implemented, the Australian government would have to try and convince, for example, Apple and Nintendo to let them install their own custom low-level monitoring software on iPhones and Wiis. I can't see that happening - would these devices then be illegal in Australia?