If you are based primarily in Australia then it is important to have website hosting located within Australia, if you're based internationally then consider overseas hosting.
In terms of contacting your website host, say if there is a problem with your service, if it's located overseas - you'll need to figure out the time difference and possibly be delayed simply because they are in a time zone different to you. We had a similar scenario - being located in Sydney and hosting in Western Australia.
You'll also find that hosting services will need to have some downtime in order to upgrade their servers or do maintenance etc....most of the time this will be in the "after hours" time of the local area - so your website might not appear to your customers when you most need it to.
Another reason to consider localised hosting is that Google (or other search engines) may determine your location based on your hosting address - so if you're hosting is located in Australia you're more likely to show up in search results in Australia than say the USA.
Just a couple of reasons I've found it's better to have hosting located on servers that are close to where you do business!
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