Apparently things are moving along.
http://www.bv.com.au/change-the-world/42133/
New state guidelines have been issued by the Dept. of Transport in Oct 2010. http://media.bv.com.au:8080/file/file/VTP%20Cycling%20Strategy_Guidelines.pdf
The document is aimed at the major culprits - road builders and managers - and argues for full consideration of bicycle facilities in future road planning and building. Even along major roads, like in Copenhagen.
I don't see anything here about fixing up the crap cycle lanes that are incomplete or dangerous, however. And builders can get out of building new facilities by claiming they are unecessary or unsuitable for the location. So the policy is welcome but needs to be tested.
contact: Department of Transport, Sustainable and Active Transport Policy, walkingandcycling "at" transport.vic.gov.au