It seems Canon Australia (and most likely Nikon Australia + all the other official distributors) who are the culprits.
If their mark-up is so high, it's no wonder local B&M stores can't compete, afterall you do have to make a profit, otherwise why do the trade at all.
I have noticed a trend lately though, at least with some Nikon gear, local prices were only about 5-10% higher so when you factor in things like GST, shipping etc. it's quite fair. If the difference is small I always still prefer a B&M store. I now have a good relationship with my local dealer and am happy with the face-to-face service. I always try to drive a bargain but it's pretty clear at what point they just can't compete.