The country's OFLC provides the age classification of all media in the country, including Grand Theft Auto releases. The majority of the GTA series is rated MA15+, however some editions of the games have drawn the RC rating ("Refused Classification"). Grand Theft Auto: San Andreas was famously re-rated after the Hot Coffee debacle, the OFLC changing its original MA15+ rating to RC. The re-release of San Andreas saw it obtain the the MA15+ rating again, after the Hot Coffee material was edited out. The OFLC has forced Rockstar to produce a slightly censored version of GTAIV for sale in Australia, but however the full game is avalible for download on the internet.
Media that receive a "Refused Classification" rating are banned from sale; it is particularly easy for games to receive this rating, as there is no 18+ classification for games. Games which do receive this rating must be edited to meet MA15+ standards to obtain an Australian release.
Note that the OFLC do not decide ratings policy, but merely enforce it -- changes to the classification system, such as providing an 18+ rating for games, must be authorised with a unanimous vote from all state attorneys-general. Attorney General Michael Atkinson of South Australia is the lone dissenting vote regarding an 18+ category for video games.
Australia within the Grand Theft Auto games
Within the GTA III era games, references are made to a war between the United States and Australia, usually in Ammu-Nation commercials and radio shows. It can be presumed that Australia lost the war -- San Andreas Ammu-Nation promotions mention weapons "from when we whooped Australia's ass", and a commercial for the 'Babies Overnight.com' adoption service in GTA IV mentions "...an Australian baby, which loves to play war but always loses."