Australia is dropping its mandatory internet censorship plans, thankfully, though it's still not convinced that some filtering is not necessary. It's "for the children" you see.
Initially, the plan was to force ISPs to block whatever the government deemed as inappropriate.
There's no need to explain why such an idea is a bad one, any censorship of any kind will be abused or, at the very least, will cause problems for lawful sites.
However, just because it will no longer require ISPs to block whatever it deems necessary, it doesn't mean that all filtering will be gone.
Now, ISPs will be required to block sites that are on Interpol's "child abuse website" list. These sites are most obviously "bad," so no one should have any concerns over blocking them.
In fact, that seems to be the plan. Of course, what this means is that Australia is not really backing away from censorship, it's just going for a smaller target.