The way this works is the government will compile a list of URLs in secret that they think us Aussies should be shielded/protected from and will distribute this blacklist to all ISPs. ISPs will then be required by law to block access to any URLs on this hidden list.
A similar filtering system is used in other countries such as China, Cuba, North Korea, and Iran. If this policy gets approved, we'll soon be joining the ranks with the above. The government will get to control what we can and cannot access.
The publicized intention of the filter is to block people from highly malicious websites, but that's just the cover story to gain the parent vote and conservative older generations vote. Those that actually have a clue about how the internet works know that this is total rubbish. These things are all done underground via peer-to-peer applications and encrypted distribution networks. Blocking URLs will have no impact on truly malicious content. Instead, the government will be able to slowly start banning access to sites that they think make us unproductive, or are bad for our local economy, or bad for spreading radical views, etc.
China for example blocks (or have blocked) access to sites such as Youtube, FaceBook, Twitter, Google Web Albums, Google Docs, and pretty much any other social networking site. The Australian filter will obviously not start out by blocking these, but how far down the track do you think it'll take before we slowly get there? If people are willing to step back and accept this filter, the government will slowly push the boundaries further and further as it sees fit to further its own agenda.
If you think this is a bad idea, then you need to take action. See http://stephen-conroy.com/ for a list of email addresses you can contact to make yourself heard, or head on over to this Whirlpool thread for a very active discussion on the matter.
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