Local bandwidth in Australia is generally more expensive than Europe or USA because we have a huge area to cover and a relatively low population. Also because of this the infrastructure that does exist is held by a handful of companies who can pretty much dictate the price.

International bandwidth is hugely expensive in Australia, everything goes by expensive undersea cables. While both the US and Europe have bordering countries where most of traffic is likely to go. Also similarly with local infrastructure, it's all owned by just a handful of companies who can strong arm providers.

Also in reference to your original question, it sounds like the VPS provider your using doesn't separate local vs. international traffic, so they're probably assuming most of it will be international and are charging on the higher end of the scale.

I think BinaryLane charges a bit less at around $1 per 10GB. There's probably cheaper providers out there but YMMV.

I expect that they are passing on the cast of laying oceanic cable as well.