Wouldn't it be sufficient to show that this type of porn appeals to those with pedophilic attractions?
Nobody is saying "small breast porn causes pedophilia" (as if non-pedophiles will watch it and then turn into pedophiles) they're assuming that it appeals and is marketed to attract with such attractions. In much the same way with people who are attracted to rape porn are turned on by rape. Doesn't mean that every person will act out those fantasies, but again, we're dealing with people who are psychologically disturbed, mentally ill.
On the other hand, officially tolerating such material sends the message that such actions (underage sexual exploitation) are tolerated by society. That's why when we talk about keeping stuff that some find offensive legal, we're saying that its only a few bad apples that spoil it for everyone else... the crazies who can't tell that what they see on screen is unacceptable behavior (and it's not like video game violence, because video game characters aren't real people being acted upon, while we're talking about real people engaged in sexual situations marketed for purposes of lust/gratification).
The point isn't that makers of "small breast porn" are having their free speech censored if this stuff is banned in Australia (never mind the slippery slope fallacy that this a conspiracy to ban all porn and censor all free speech). It's the question of whether the purpose of this material is to market to those with pedophilic tendencies, since, logically speaking, they would be those primarily interested in the stuff.
The "increases pedophilia" thing would really only apply to the fact that if there was a demand for it and it was permitted, that might increase the number of persons applying for the job of "acting" in flat chested porn, increasing the likelihood that minors would be exploited (whether they lie about their age or the producers look the other way), making it harder to prosecute crimes.
They could "shut down the internet" I suppose (is internet access defined as a human right?), but that's not even the issue. It's not a matter of being able to stop the practice 100% or else they can't make laws regarding it to restrict most of it. A law is not a law simply because it is never broken (or unbreakable).
I don't think anyone is seriously arguing that pedophilia or underage exploitation will INCREASE if these laws are passed or attempted to be enforced. Again, see other laws against things that people have done and will always do. The goal of a law is not necessarily to eliminate something by preventing it from ever happening, it's to send the message that the society will not tolerate it, and to punish (and seek to rehabilitate, where possible) those who violate those standards deemed by the society (or by the lawmakers with the consent of the society at large) within the bounds of reason and justice (in the always imperfect human way, of course).
Theoretically, we could make murder legal. It would mean theoretically there would be more murders, but it would mean that murder would no longer be punished. Since punishment CAN (but does not always, obviously) deter a crime (vs. reward or non-punishment making it more accessible or even promoting it), that's how it would go. Anyway, that's the logic of law as I see it.
I mean, we can say "ban the internet" for a lot of things... because of hate speech, because of piracy, because of medical or other scams, because of terrorists using it, etc. We cannot largely argue that if the "only way" to finally really eliminate it is to "ban the internet" we should just leave it alone. But that's not logical to begin with, because these things happened even without the internet (and would still happen without it). You can also apply restrictions (such as the filtering suggested and compliance from corporations like Google and so forth) without "banning" the internet. Doesn't ensure elimination of the crime, but you'd still see predictable reasonable reductions, logically.
It might be possible to compare it somewhat to smoking bans. You can't stop people from smoking, so why all the bans on smoking in various places? The logic is to reduce the potential harm and by making it harder to smoke, possibly encouraging people to quit and/or discouraging others to start. There are plenty of people who consider that a terrible blow against freedom, but that's the logic of such laws, and I'd argue that smoking is in many ways less harmful to society (and individuals) than sexual exploitation of minors. Alcohol too is restricted in many ways. If you treat porn the way you treat these other things (that have a high demand, but also high potential for abuse and some hidden costs), that isn't so strange, really.