Tipping is not expected anywhere, and historically has not been the norm - basic wage rates and overtime payments in the hospitality industry have generally been protected.
Tipping in restaurants is not necessary, but certainly appreciated, and seems to be becoming more common. Some Australians leave tips for good restaurant service, but usually only in expensive restaurants. 10% for good service appears to be the usual figure, with more for exemplary service. There is a higher expectation that large groups leave a tip. Tips are often pooled and shared out amongst all staff.
In bars and taxis, tipping is also not expected, although many people simply leave some of their coin change on the bar after picking up their drink, or tell the cabbie to keep the change.
Tipping in hotels and other service industries (such as hair salons) is still uncommon.
Australian service is often more casual than in many countries, even in expensive restaurants and hotels. You will very rarely get fawning service in Australia - in keeping with Australia's relaxed national character that usually seeks to treat everyone as equals. However, if you have received rude or incompetent service, you should complain, politely, or do what Australians tend to do (given that Australians also generally don't like to cause a fuss) and just never go back to that establishment again.
A side note: In Australia, the term "tip" is also the name used for a garbage dump, rather than having anything to do with gratuities.http://www.tripadvisor.com/Travel-g2550 ... uette.html
- - - - - - -
Tipping is still quite a contentious issue in Australia and New Zealand.
Locals, particularly those away from urban areas, say: Don't.
The problem is there's no hard and fast rule to go by. Generally Australians and New Zealanders say tipping (see discussion) is not only unnecessary but also a practice to be abhorred since, or so the argument goes, Australian workers in the tourism and other service industries already get paid sufficiently.
In fact, as a practice, tipping is relatively new and has been brought Down Under by those coming from "tipping" societies, particularly Americans. http://goaustralia.about.com/od/practic ... ipping.htm