it all depends on what you are shipping. (the dollar amount) I find the best way is to use the Global Priority Mail - Flat-rate Envelope (small). It costs $5.00 USD to most foreign places (I assume you are in the U.S.) and for $12.50 more you can have them pick it up at their postal service. I have sent high dollar amount ($100+) cd's this way.... or just send it EMS mail. For certain countries like mexico that is the only way I will ship it.
If it is a big $$$ item usually the buyer is more then willing to pay for the extra cost of shipping with insurance. It is their to protect both of you. You from a chargeback and the buyer from damage/lost item. I always have in my auctions that international bidders take on the risk and the fees that go with sending overseas. (also note payputz charges you a higher % from an international buyer)
blah blah blah... i am rambling. Be safe, charge the buyer the appropriate fees to ship it correctly so everyone is happy, and cancel the australian's payment and make him pay the shipping fees.

PS: if you insure it do not declare the value on the customs form under what you insured it for. (it is not your fault that their country may charge them duties on the package)