I dont know the actual justification behind it but i would say:

1. The Liberal party here love protecting business interests and giving pretrochem companies huge incentives, tax breaks, etc to take our resources and they probably get hard for how much more fuel they can sell here.
2. Australia has inexplicably bad fuel standards, as such car manufacturers dump their shittest engines here which run on this low grade fuel and every time we talk about reforming this the manufacturors run a scare campaign about how much extra cars will cost if they have to meet these standards and the Libs have been jumping on that.

As to the big cars thing, we have typically had quite regular sized cars and our typical tradesperson vehicles (called “Ute’s” here, “trucks” in the USA) were significatly smaller than their american equivilants, but local manufacturing shut down and now we buy from whats available on the market. Also the laws around taxing work vehicles is worded in such a way that bigger cars get taxed differently and incentivises people buying these cars and slowly our car sizes are increasing and more and more giant ‘Yank Tanks’ are appearing on our roads. And couple this with car manufacturers slowly changing the publics idea of what a ‘family car’ is from a large sedan to a small suv to a full blown suv or 4x4 7 person tank.