Ridiculous - I had to replace my Swiss Army knife while in Oz in 2001 and had no trouble doing so in Sydney, carried it on me the rest of the trip. Nobody mentioned a “no-carry” rule.
An officer has to notice the knife in order to enforce the law.
The few enforcement actions I read of while there were for having a knife in a bar, which was forbidden.
I saw numerous knives for sale in Australia. Some clearly forbidden to be imported by a traveler.
Australia has an interesting federal system. The federal government is responsible for the borders and imports/exports.
The state governments are not.
The rule is: can you articulate a "good reason" to have the knife with you? I was told the "magic words" were "food preparation" and "safety tool" to escape vehicle.