The dilemma: anarchy or the police state?
To address that dilemma, democratic society need separation of powers with strong oversight by an independent justice system and through public scrutiny. There is a lot of room between anarchy and the police state, but the damage by moving close to either extreme may be terrible and quite irreversible.
We have this discussion, which is evidence that Australia is neither an anarchy nor a police state. But laws that establish powers keeping "providers [...] quiet about agencies' covert operations, enforced by jail time and massive fines" would remove public scrutiny and judicial oversight and might do some damage. Judge for yourself where the right balance should be.