You say it like it's a simple easy solution that completely reverses the negative side effects of filtering.
In reality, proxies are generally unreliable, slow, have problem's with certain websites and the big issue; not everyone is tech savvy enough to know what a proxy even is, let alone how to use one.
Even if we can use proxies, the internet will still be slower, the filtering will still cost us money, our rights will be broken and business will be heavily discouraged from Australia (just look at Google's recent pullout from China).
Filtering isn't the solution to whatever perceived problems there is with internet and it's use in our society.
On the issue of Child pornography, it seem's to me that filtering the ENTIRE nation's internet is a last ditch effort due to the failed tactic of individually tracking down the people who put the Child pornography on the internet in the first place (something which Police around the globe has proven to be very innefective at).
As usual, this is simply another political stunt which a very small number will benefit (financially and otherwise) from.