I'm just confused why the backassward morality of Australian government is Volition's responsibility to overcompensate for.
Well first of all it's not the Australian government it's the Australian Classification Board which is an independent organisation formed by the government in the 70s. In the past few decades it has been receiving "administrative support" from the Attorney-General's Department which people believe have been putting pressure on the classification to abuse a loophole in Australian law that was the RC (refused classification) rating.
Videos games were getting the brunt of this abuse due to a few reasons. Firsts of all it's a new and misunderstood medium. Secondary it was assumed only children played video games. Thirdly it's believed due to video games being an interactive medium it would influence young people into anti-social behaviour. Lastly it lacked an R 18+ rating which meant it was extremely easy to RC video games that did not fit the classification of MA 15+.
Now that there's an R 18+ the classification board can only come down on video games due to their interactivity which is why the board only really comes down on drugs and sex. It's also only when the product is shown to have reward associated with either drugs or sex, see the Witcher 2 RC or of course Saints Row 4 for example.