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Driving in Australia
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I had the same idea when travelling across Australia. However once I had checked out the insurance (same as UK) & car breakdown cover, (which you definitely need!) the costs between hiring a car and buying one were minimal.
I hired a car that had full breakdown cover and no mileage restrictions from a national car hire company so we could drop the car of at any of their depots. The costs were very manageable, with the peace of mind that if anything did go wrong we could have changed the car straight away. To get an indication of pricing check out some companies online before you go. Just remember to bring all your licensee details with you.
Good luck
GD
The laws will vary slightly from state to state but will include the equivalent of an MOT and at least third party insurance. For a few weeks your UK licence will be OK but for an extended stay you'll need a local one - you need to take a theory test but not a road test to exchange.
Bear in mind you may find it difficult to insure and register a car without a 'proper' Australian address. It's certainly not impossible as people do it but it's not starightforward.
As far as I am concerned, you do not have to get a license as australia recognise any licensing system that is similar to theirs. They drive on left, same as us and believe our driving tests to be more stringent to theirs and therefore acceptable. HOWEVER, after 3 months (unless you have an current overseas license), you would have to get a state license.
I know this is correct to travel in WA, NSW, Queensland and Victoria, the other states you will have to check to see if they are now affiliated.
Check out Kings Cross backpackers car market in Sydney, you can buy a cheap reliable jalopy for peanuts (if you want to risk it).
Insurance?? Not too sure here but you need an ozzie address, but someone else with a state license and a fixed address can vouch for you, which may help.
I went about 4 years ago so I may be a little rusty on this subject.
Aside from the things mentioned above, for just a few weeks travelling it is so not worth the hassle of it. You will spend at least 1 day of your trip finding a car, and then even if you only have 1 problem with it, that could mean another day in a garage or by the side of the road. Plus when you come to sell it, it could take a week to sell on, or you will have to sell it to a dealer and take a big loss. Definitely hire for such a short time.
(If you were going for 2 months or more I would say it is worth buying, though, we did it, it was awesome! Surprisingly hassle free if you get a car with WA plates - no MOT or checks when changing ownership!)