But the eight-time winners got off to a less than solid start in the contest, involving 320 teenage debaters from 36 countries.
At the knock-out stage, the Australians had won only five of their eight preliminary debates and were ranked behind Wales, which had won seven out of eight.
The Australian team knocked out the Welsh in a debate in which they had to champion the cause of government subsidies for the arts of minority cultures. Australia went on to beat Ireland in a heated discussion of whether democracy is the best system of government for every nation.
Winning team member Vivienne Jones, 17, from Macrob girls' high school, in Melbourne, said: "We all felt incredibly nervous - there's nothing like a grand final to put on the pressure. We had some luck with the motions. I'm just relieved it's all over and we can have a party."
BBC TV news reader Huw Edwards, who chaired the final at Cardiff's City Hall, saluted the teams' energy, the high standard of debate and the patience of those who listened to 159 debates.
Chris Erskine, chairman of the World Schools Debating Council, said: "Every one of the quarter-finals was won by the debating equivalent of a penalty shoot-out. The distance between the two finalists and the teams sitting in the audience was very, very short.
"I would like to honour all those other teams, whose contribution has been remarkable, whose standards have been outstanding and whose friendship has been enjoyable."
The event was hosted by the Welsh Centre for International Affairs.
Sponsors included the Assembly government and the councils of Newport, Cardiff, Torfaen and Carmarthenshire, whose schools hosted the preliminary rounds, listened to by thousands of Welsh pupils.
First minister Rhodri Morgan advised the debaters: "Ignore your opponents' weak arguments because you have got to take them on in their strong arguments. It's only if you can destroy their strong arguments that you are going to win."
First-time participants this year included Botswana, Lesotho and Montenegro. Next year's championships will be held in Seoul, South Korea.