The 2001 Census Listed:
238,490 Residents born in Italy (down from 289,000 in 1971). Their current median age is 62 (compared with 35.7 for all Australians).
Australian censuses do not classify 'ethnicity'. Instead they use country of birth and language spoken at home as categories.
Only 1986 and the 2001 censuses used 'Ancestry' as a category: the results for Italians were as follows:
1986:
620,227 people of Italian Ancestry. Of these 40.8% were born in Italy. Hence second generation numbers were 367,174 approx. Italian speakers were: 61.5% of the total. Assuming that all of the Italian born also spoke Italian, 35% of the 2nd generation were also Italian speakers.
2001:
800,256 people of Italian Ancestry. Of these 26.1% were born in Italy. Hence second generation numbers were 511,364 approx. Italian speakers were: 39.9% of the total. Assuming that all of the Italian born also spoke Italian, 21.6% of the 2nd generation were also Italian speakers. In total, these figures correspond to about 4% of the general population of approx. 20million, and about 14% of the population of non-British ethnic origin.
Source:I have derived and elaborated the above information from the Australian Bureau of Statistics (http://www.abs.gov.au/)