Meh,
Online Filtering has been a hot/cold topic for decades. If I remember correctly the Howard government in the early days wanted to push through with mandatory filtering but got quashed by the Telstra monster. Then only recently Howard did the whole client side filter thing but take up numbers were used as justification for it to be shutdown (by the Rudd government).
The numbers WERE tiny, whether it was because the 'protect the children' advocates were the vocal minority or that the software was crap anyway who knows but it's gone now and the company that did the rebadge has walked away with a pretty penny regardless anyway I'd imagine.
As for this one, well, technical issues were the major factor when Howard tried it but that fizzled. Technology has come a long way but actually effectively protecting users from everything would be highly difficult. Pure identification and throttling equipment at the moment will cost you at least ~40K to cover ~Gbit of traffic. To most ISPs the entry cost of such a thing would be bad (particularly your budget operators).
Let them do their tests, let them do a technical report and then they'll say 'well, we want to but technically it doesnt work' and it'll fizzle out until the next bunch of child protectors come by.
I'm not a parent but seriously, it's their responsibility to monitor the kids. ISPs are ALREADY required to have a recommended and resold filtering package for their customers (ie. it's mandatory).
Finally, the ACMA blacklist already exists and is already in play. There ARE ALREADY websites on the internet Australians can't get to it's just that it's really really small (ie. <500 IPs or something). There has been for quite sometime (at least 5 years). As for whether it should be expanded, well, that's what the privacy advocates are going on about....
BrianOZ, I think the thing Conroy is going at is to protect the kids not stop the pedophiles and co from getting their wares. Filtering won't work nearly as effectively as a copper pretending they are a 17 y/o and requesting subscriber info from ISPs.
Stu