I have never sent a knife to Australia, but Ive read a few horror stories about knives being shipped there and not making past customs. It really depends on the knife, if you answer Over Kills question about knife type then you can probably get better answers. There are alot of very strict laws over there, and that is really supposed to be the buyers responsibility, but if he doesnt know the law/or doesnt care and the knife gets held by customs he can do a charge back and take his money right out of your account. Paypal almost always sides with the buyer, so as the seller you want to make sure youre dealing with an honest and responsible person, and keep ALL of your RECEIPTS. I even keep all of my emails that have anything to do with the knife, payment, shipping, anything at all to do with the transaction. I personally would find a US buyer. Ive done trades over seas and they have gone good, but if it goes bad it can go really bad. But to me, if you are already questioning the deal, then you should really rethink going through with it. If I see ANY red flags then I cancel and move on.
I hope everything works out for you. Good Luck!