Yes, the older SMLE's etc are pretty much gone, but there's still a fair amount of L1A1's, etc floating about. With increased production from Lithgow Small Arms, a sizeable proportion of soldiers might be issued with F88's, but you'd still find plenty of the older weapons especially in support units. My own original reserve unit was only converted to the F88 in 1994 and still used the M60 until quite a bit later.
Given WWIII really kicks off in 1996, anything that goes bang is likely to have been retained, but since the vast majority of fighting takes place a very long way from Australia, it's unlikely there'd be a general call up of personnel so early on (unlike in WWI and WWII, Australia wasn't directly involved except in Korea where I believe we'd have put about a brigade).
With Indonesia becoming a problem the regular troops in Korea are likely to have been recalled and replaced with reservists (my guess is 9 Brigade organised as a mech brigade, and reinforced by the Scorpion light tanks of New Zealand), and 1st Division sent into the tropics - the remainder of 2nd Division acting as a garrison for mainland Australia and reinforcements/training.
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