From the official Australian government travel page;
Code:
Entering and leaving Australia
To avoid delays at airline check-in and again at the border entry point, Australian citizens
who are dual nationals are advised to leave and return to Australia on their Australian passport.
An Australian citizen cannot be granted a visa for Australia.
When entering Australia, all Australians, including those who hold dual nationality,
must be able to prove that they are an Australian citizen. An Australian passport is
conclusive evidence of a person's identity and citizenship, and provides the holder with
unfettered right of entry to Australia.
An Australian citizen who arrives without an Australian passport may be delayed until
their identity and claims to enter Australia have been checked. If a person holding a
foreign passport claims to be an Australian citizen, immigration officers must confirm and
verify this through official databases. This will invariably cause some delays to the person
while the authorities undertake the necessary enquiries.
International airlines have an obligation to ensure that they only carry appropriately
documented passengers to Australia. In the absence of an Australian passport, airlines
are unable to assess an Australian citizen's claimed citizenship at the time of check-in and may
decline to carry the traveller. Or, they may have to make inquiries with the Department of
Immigration and Citizenship (DIAC) in Australia to seek approval to carry the passenger, which
takes time and may cause inconvenience to the passenger.
So it looks like Australia is okay with it as long as you carry your Australian passport with you to prove citizenship.