If Australia law dictates that piracy and theft of source material is illegal and punishable by law, then yes you're ****ed even if you don't use the game for money.
The only reason most people don't really get caught is because it's either a very small community of friends, or for ones own personal use as a testing platform.
If the community grows to a fair size and gains the attention of developers, or you start using the product as a marketing platform, via selling premium goods/cash items, then you'll get a lawsuit up your ass regardless of where you host it; because while the server itself may be in Australia, YOU are not.
This is the last private server discussion comment to be posted here, because I felt you should really take caution to what you're about to embark on doing if your intentions are to "make it big" money or community wise.
With that said, if you want to elaborate on this project discussion which the thread turned into, you will have to do it elsewhere.