This article gives some insight, https://7news.com.au/news/australian-passport-fees-to-jump-again-in-2025-heres-what-youll-pay--c-17225775
It sounds to me that it's the most expensive in the world because it can be and it raises money. The government and DFAT say it's expensive because of the technological sophistication, which is why it's highly trusted worldwide, and the cost pays for it's expensive production.
But New Zealands is just as powerful and only costs $205 AUD, and Singapore's is considered the worlds most powerful and only costs $83 AUD. Maybe the sophistication isn't so important, maybe the costs are just way lower there, or maybe it's subsidised.
I bet if it becomes a political issue they'll drop the price in a heartbeat to make themselves look good. Australian (Libral party) governments have a history of cutting costs and raising prices in every way they can get away with to make their budget look good.
Another interesting point is the US passport was $252 AUD back in 2024, but comparethemarket.com.au lists it as $414 in 2026. Massive hike. Probably because Trump.