[StainlessSteelCynic]

As mentioned, it was "common talk" i.e. soldier's gossip.
The actual reason for withdrawal of the M113 MRV may have been as prosaic as plans for the future structure of the army no longer saw a role for it.
Or because the 76mm was seen as no longer effective against current and/or potential future threats.
However, what was commonly mentioned at the time was that it was done for health reasons because the 76mm ammo was claimed to produce carcinogenic smoke.
How accurate that belief was, I don't particularly know.

EDIT:
After some checking on the web, it seems the claim most likely originated in the UK in 1991. The belief is that the Scorpion was classified as a "tank" under the Conventional Forces Europe treaty and was earmarked for removal from British forces, apparently in order to prevent the number of MBTs on strength from having to be reduced further. However soldier's gossip made that into "Scorpion was removed because it caused cancer etc. etc."
Other claims about the smoke from the 76mm ammo are that it was toxic, that it caused Alzheimer's disease and even Parkinson's disease.
Why Australia chose to remove the MRV from service could have been a knee-jerk reaction to the those rumours or it could indeed be something as mundane as the 76mm (which if I recall, only carried HESH and HE as offensive rounds in Australian service) was considered no longer up to the task.