Short version:
EA, THQ, and Take 2: What on earth are you thinking?
Long version:
I'd really like to see an analysis on who distributes games throughout Australia at the moment, what sort of market share they hold, and what distribution rights they've sold to other companies, because I believe it has a big impact on the prices we're seeing.
From what I can tell, the landscape of distributors in Australia consists of:
* Namco Bandai (Sega, Atari, Square Enix, Konami, others)
* Ubisoft (self-distributor)
* Take 2 (Rockstar, GOD, 2K, others)
* THQ (self-distributor, Capcom, Gamecock)
* EA (self-distributor)
* Microsoft (self-distributor)
* Activision (self-distributor, LucasArts)
* Auran (self-distributor, some Stardock retail, some JoWood?)
* Allinteractive (several small studios, and sub-distributors for most of the above)
Namco has done a decent job in trying to keep Australia in line with the rest of the world as far as digital distribution and sales are concerned. Activision has been good, too, and I've noticed that they've been doing a good job of getting old LucasArts IP back onto Australian shelves (we've been able to get a few classics like Full Throttle at budget prices for a couple of years now). Ubisoft has been picking up its game, too, albeit slowly.
I've seen arguments before about how distribution licence agreements in Australia are complicated and therefore we can't get in on the sales, but I just don't understand it.
EA is pretty much a global nightmare and should be embarrassed about the way they've handled their own distribution, especially for their old IP.
I find it amusing that independent Australian distributors like Manaccom (boxed retail releases of shareware games), Auran (also the developers of Dark Reign), and Red Ant (now defunct; was a distributor for Zenimax/Bethesda and Konami) seem to have caused less roadblocks with digital distribution than their globalised counterparts.

I've gotta wonder what the hell the game companies and MS are trying to accomplish with those prices. The only answers I can come up with that make sense are:
1) It's intended as a form of market segmentation. They've already got games selling at lower prices through several other channels, so this is just to make some extra money off of the suckers willing to pay ridiculous prices for some added convenience.
2) They're planning to lower the prices slowly through sales that then become permanent in order to figure out where the sweet spot for pricing is that maximizes revenue. Usually this kind of thing is done through market studies before any kind of public release, though.
Of course, there's always the possibility that they're simply batshit insane and blinded by greed, although this seems pretty over the top even for game companies.

I picked up Table Tennis for 10USD last week. I don't know the exchange rate, but I know that price is batshit insane. Holy Christ. I just checked the exchange rate - Mass Effect is like $80???

Yup, totally crazy.
Kotaku has a bit more on it, surprisingly high prices for mass effect and a few others. They should have had a larger ebay retailer for that perspective
http://www.kotaku.com.au/2009/08/just-how-crazy-are-those-xbox-360-games-on-demand-prices/

Do they have the platinum hits series in Australia? Is Mass Effect PAL rare or something?
edit: Is Australia PAL or NTSC? I forget. Are other regions cheaper? If, so set up another account, and download it from them if your credit card doesn't hit you with a sizable foreign currency charge. This appears to be limitedto XBOX Australia. I download Japanese demos all the time with my alt ID, but I don't know about how it works with marketplace stuff. See if it works with a movie or something.

Oh we have the budget range but mass effect isn't in it yet, must still be selling well enough.
We're PAL (NTSC is "teh ghey") but I've never found a console game from overseas that doesn't work here, had games from hong kong and canada work on local consoles.
From what I understand, you'd have to buy regional specific MS points from ebay and use those because the credit card systems won't accept cards from overseas

You sure? I can't think of any way Microsoft could monitor it without excluding ex-pats and military (and I know plenty of guys stationed overseas who play the hell out of the xbox). I can't imagine they never ordered anything. Cheaper to just not bother for them. Setting up an alt account is a pain in the rear. I may be wrong, I never tried ordering anything from my Japanese alt.
In terms of the CC side, my CC company charges me an additional $0.29 per transaction in foreign currency but that's about it when I deal with Hong Kong.

Well this is going into the realms of "stuff I read from people talking on the internet" so accuracy is increasingly in question here but from what I've read there are issues with US accounts abroad, something about US external territories and soldiers not being able to use as much of the service or something. Not sure on the details
As for the CC thing, from what I've read again, you can't register a CC on the xbox for a territory that's not from the country your account is tied to. For example if I was to make an american account (and I did just to see what the video marketplace was like, EVER so slightly different to the useless dregs we get), I'd need an american credit card (or american MS points cards) to buy content
Ahahahahahahaha funny stuffup with the manuals