No, international entries are accepted, but you can not win any prizes.
If an international entry wants to win prizes there are two possibilities:
1. You come to the event yourself
2. You team up with an australian or nz residant and enter a 'team' entry (eg: find an australian to do the music for your game, and enter it on your behalf.) - obviously it is up to you to come to an agreement as to how to split the winnings.
The links page on the nullarbor site lists a number of australian digital content creation community areas where you can try to find a local representative for your entry.
Since the event takes place at GO3 it would still make sense to enter as one of the buyers there might see your game and contact you about it. Or, one of the international game companies there could contact you regarding employment. (Take a look at the GO3 exhibitors & conference speakers list : MS xbox, nintendo, nvidia, EA, etc.)
Edit: see the (updated) FAQ:
http://www.notrees.org/2007/faq