As bad as it all sounds, I'm willing to bet they wouldn't even know what to do with all that data. They could mine it for information, but to achieve what exactly? They'll create so much work for themselves that they'd need to have 100,000 employees just to sort through a portion of it and take any kind of action.
As far as I can tell, it stems from empire building within their ranks and even the attorney general's area. Conroy wants an NBN, which would no doubt contribute to his desire to also filter/block/manage all of Australia's internet access too. So this kind of BS is coming from several different angles.
But all they'll do is create work for themselves and annoy people a lot. If they annoy people enough, then the "turn off the stupid filter/data retention" party will no doubt rise up and get rid of it all. I guess a lot of the population doesn't realise what it all means yet, but they'll find out.
I used to be really concerned and upset by all of this, but technology, encryption, data volume and reduced Govt revenues/taxes are all working directly against this kind of stuff. They're fighting reality, and they'll have to give in eventually.