[StainlessSteelCynic]

As we know, the Twilight War is part of the backstory for the 2300AD setting. In 2300, Australia is a major player, in part because the nation did not suffer as much destruction as others during the Twilight War.
The point I'm trying to make with this is that it appears that canon very much subscribes to the idea that Australia was damaged but not "bombed back to the stone age" and was able to get back on its feet faster than many other nations and hence become a significant force in the galaxy.

So Australia probably does not get heavily nuked because the idea runs counter to what 2300AD canon has established. Now whether you want to include 2300 into the thought process or not is personal choice and most of us probably don't bother (simply because it takes place another 300 years down the track!)
But given that Twilight: 2000 was developed directly from it, 2300 canon played a big part in the development of Australia's situation in the T2k setting so for us to stick within GDW's ideas, some way needs to be found to knock down the country, but not something that is a TKO like heavy nuke strikes.

Edit: I was of the understanding that those Challenge articles were also considered canon material. I think this has been checked on by someone here, it was certainly discussed here some time ago and if I recall it was generally considered that they are part of canon.