Doubt anyone is losing much sleep over this. Of course by not recognizing "west" Jerusalem as Israel's capital Australia recognizes no capital of Israel since it's modern emergence as a state. Odd, they recognized Israel in 1949 but won't allow Israel a capital apparently bowing to palestinian demands for a veto of it's existence. Said veto in palestinian minds extending far beyond recognition of a capital
Might be the 1949 recognition wasn’t even valid, because they were part of the British Commonwealth at the time, so if the UK hadn’t recognized Israel at that time, the Australian recognition is suspect, too. Like what if the state of Vermont decided to go around recognizing countries. Now Australia is a sovereign state, so its action has more meaning. But in 1949? I suppose exchanging ambassadors since then would count, so the question is now moot.