There are three main reasons why Australia cannot support a large population despite its size. There are
1) Soils - Australia has some of the oldest and poorest soils in the world. This is because there has been very little glaciation or volvanic activity in Australia and therefore no renewal of the soils.
2) Lack of rainfall - much of Australia is arid or semi-arid
3) Salination - because of Australia's topography most rivers do not empty into the sea. As a result salt has accumulated just under the water table. If such lands are watered the salt rises and the land is poisoned.
I often thought about large areas like the outback where sea water is pumped in from the oceans and hundreds (thousands?) of desalination plants are set up to create fresh water, and then simply 'flood' the outback. Not a quick solution but over several decades (well more like centuries) you might see useable land pop up.
Also might prep us for terraforming other planets.