I'm unfamiliar with Australia's game rating system/laws. I thought it was just violence in games that caused problems over there, not nudity.
I don't really know them either, to be honest, but I've heard that they have some extremely...conservative politicians holding the reins lately. They aren't even necessarily the only ones.
I've never been to Australia, but no one should be deprived of their TES fix by politicians who probably haven't played games of any kind since prior to the invention of the personal computer.