There are fines lines which governments shouldn't cross. One such line involves the image of women in society. It is not up to the government to dictate what small breasted women can and cannot do.
Also, speaking a little more about this law in relation to Australia... it seems to be focused more around an issue in Australia that occurred awhile back when one of our most famous and respected artists showed pictures of a nude teen girl at an art gallery... Enough people seemed to have a problem with it even though they don't seem to have a problem with paintings portraying nude children, but anyway... I feel that this "no small breasts" thing has more to do with that than anything else.