Completely concur regarding long distance travel in Oz - take the plane.

Bear in mind that Avalon is a bit further out from Melbourne itself than our main airport - Tullamarine. Virgin and Tiger fly in/out of Tullamarine, but Jetstar does some of its main services in/out of Avalon.

I believe the ISIC card allows for concession on interstate train travel, if that is still something you're considering. Whilst our trains aren't travelling deathtraps, they don't really offer the amount of comfort compared to Japanese/Western Europe counterparts.