Haha, thought of two more terrible ones: Pete Murray & Jet.
Australia does produce some stellar stuff though. Relatively large/well known groups like Augie March and the Avalanches - there are quite a few - are up with the best of them.
The other good thing about the Australian music scene is that you don't have to be boxed in just one of two or three genres to stand a chance. Love them or loathe them, an act like the John Butler Trio would never in a million years hit number one (and they did so easily) in the US or UK. That really is a credit to the unique reach and success of Triple J more than anything else, but it's still something good.
What, I think, most people in this thread are saying they don't like is the dominance of the mediocre here. Varying degrees of talent, you can't deny some are talented songwriters, but overall fairly generic, bland music, and the same stuff over and over and over year after year, where you are getting the feeling they are getting a serious inflation of status and respect simply because they are Australian.
I think we'd all love something truly brilliant to come from here, for the next Arcade Fire to be from Sydney or Perth or wherever, not from North America or the UK. Probably the closest thing we've had would be the Avalanches, whose Since I Left You album actually shook their genre and has massive, real, respect within it right around the world, but unfortunately that's a pretty niche genre. Before them? Anyone? When was the last one?
There's a reason why Powderfinger, for all their size here, have never cracked it overseas: there are approx 15,236 bands doing the same middle of the road rock in any mid-western US state, and it's all at about the same level of dullness. I have no doubt that Australia could produce act after act of decent pop-rock that either reaches the heights of Powderfinger here, or are just unique and new enough, and packaged so brilliantly, that it goes global like INXS, but something that gains a collective "Woah!"?
There's no reason why we can't produce a talent like that. It's certainly got nothing to do with population - look at just individual cities like New York or London who produce more new unique, creative, brilliant musical acts in a year than this whole country does in a decade - or more. I think it's more to do with how talent is nutured and communicated. Once you are given the leg up, you're running - eg John Butler Trio as an example of a left field genre hitting the top, and he can thank Ben Harper more than anyone for the opportunity - but it's practicaly impossible to get that leg up. That's the problem.