Local SIM
A local prepaid SIM costs $2. Then you need to charge it - there are all sorts of options and what you need depends on what you need the phone for and your level of usage. I believe that for ~$30 you can get enough credit to last through 10 days of average use.
If you intend to go outside of greater Melbourne, your best bet (reception-wise) is Telstra, though they are one of the most expensive. Otherwise, any provider will do. You can "shop around" on the web to find out what options you have. As far as I know (and I don't
), only Telstra, Optus and Vodafone have physical infrastructure. All other providers use one of these 3 - normally you can find out which one, online.
You can buy SIMs and recahrge at the airport - the leading providers have their outlets there, in/near the arrivals terminal (duh...)
Have fun.