The wording of that contract, as shown in your article, suggests to me that HTTPS would suffice as an encrypted connection. An HTTPS connection is not a VPN. Therefore, secure transmission of content can occur even if VPNs were banned.
I don't support the banning of VPNs - but the real issue is that content owners have made the mess themselves. By splitting up broadcast and online rights to different parties, poor suckers in Aus/NZ that want to consume the content have to either subscribe to multiple, costly services or resort to VPNs to get a reasonable service.
Lastly - if someone is using Netflix overseas guess what - they're still paying for the content so unless we're being screwed (which we are) I don't see why Big Content would be upset anyway.