Sure, midwest is much cheaper (so is Florida, the Carolinas, etc.). Most foreign tourists visit NYC and California (not opinion, but statistical result) and those happen to be more expensive parts of the US for hotel and restaurants and even entertainment. Theatre ticket in Australia is comparable to Broadway prices, not higher or lower, for example I saw Jersey Boys in Sydney and it was AUD 120. This year I've been to Daylesford (small spa town and artist colony near Melbourne) and Carmel (small spa town and artist colony comparable distance from San Francisco), and the prices were surprisingly similar. Of course Carmel has always been one of the more expensive small towns in the US, while Daylesford used to cost half as much. Globalization and supply and demand at work, along with advertising. While it is true that the Australian tourist industry cannot compete on price -- in reality it never could. Bali, Thailand, Phillipines etc. would always be far cheaper, and even NZ is significantly cheaper than Australia. Tourism in Australia has to compete on product quality. Sometimes it does a great job of that and is not price sensitive (witness the Sydney Bridge Climb), and sometimes it struggles.
One thing that US tourists have to realize is the "cheap pub food" is actually well made and cost-effective food in Australia, quite different from pubs in UK, Europe or US. Pubs (called "hotels") are the Aussie equivalent of Applebee's or TGIF, only with better food and independently owned.