As your link itself explains, the vast majority of those vacant properties are either a) holiday homes that are empty outside vacation season, or b) "areas with declining population where dwellings are simply abandoned by owners who can’t sell their property". Vacancy rates in major cities are remarkably low.
it may not be a big problem at present, as there is a huge real estate boom in Australia. But when there is an economic downturn these regulations are going to hit older areas extremely hard, just like they have in many other nations.
I've lived in the inner-west all my life & I know 5 or so squatters. Yep. There are vacant buildings everywhere you probably just don't know it. There's a whole world outside the market & we need to encourage this sort of thing, or else a city becomes locked into mortgages with little job flexibility. The ability to live cheaply in a city is very important. High costs to maintain a basic lifestyle mean less risk taken, less businesses started, less innovation, less arts. In total contrast to Sydney is Berlin: high unemployment, very low cost of living, tons of start-ups, tons of arts.
REIV vacancy rate is (unleased property on the books) / (property on the books).
It's always going to be an under-estimate of true vacancy due to properties that are empty full time and those that are privately managed and temporarily vacant.