Midnight Oil is on a six-month leave of absence, radio stations are playing old AC/DC songs to fill their government-imposed Australian-music quota, and the hottest band in the country is made up of three 15-year-old high school sophomores who sound like Pearl Jam.
Australian pop music, which exploded onto the music scene in the United States with bands like INXS, Crowded House, Men at Work, and Midnight Oil in the 1980s, is trapped in the worst doldrums of its short history.
With no new Australian band having broken into the US market in five years and US grunge bands flooding Australian airwaves, artists are blaming record labels, record labels are blaming radio stations, and radio stations are blaming the government.
''Australian music was beginning to come of age,'' says Midnight Oil manager Gary Morris. ''It was giving out its own definitive sound to the rest of the world, but it was cut short.''
In a worrying sign, Australian bands now account for only 20 percent of domestic music sales. A summit meeting between the Australian minister for the arts, Michael Lee, and musicians at the end of April produced few major changes in government policy.
''It's starting to take on an ominous tone. We're not even holding up locally, we're just becoming an outpost of America,'' says Warren Cross, an entertainment-industry lawyer.
Intervention by the Australian government, which is eager to have pop music again become the A$100-million export industry it was in the 1980s, has actually been more harmful than helpful, according to critics. Some in the industry are calling for complete deregulation of radio and the recording industry, while others want a drastic change in the way government tries to encourage new music.
Midnight Oil manager Morris is circulating a two-page diatribe accusing the Australian government and some parts of the music industry of committing ''cultural genocide.'' He blames a government auction of radio frequencies at inflated prices in the late 1980s for creating a situation that stifles new bands: Heavily indebted commercial radio stations are now playing only sure-fire hits and avoiding risky experimental new music.
''The bean counters said we need to play only music that's safe. It lost that edge,'' says Morris. ''There is no confidence for investors to invest in Australian bands because radio is not going to play new music.''
An April decision by the government to continue a system of artificially inflated CD prices has also come under heavy fire from musicians. Under the policy, record labels are required to invest a certain amount of the profits generated by the inflated prices in new Australian bands.
But critics say the system shoots itself in the foot because the major labels may invest in new local bands but fail to promote them overseas. And, more damaging, the program makes the cost of CDs in Australia exorbitantly high -- as much as $25 to $30 each -- which discourages people from buying new music.
''There's no more money being invested [in overseas promotion] than would have been anyway,'' says Andrew Humphreys, music editor at Australian Rolling Stone. ''CDs are the kind of product where if the price gets too high, people just aren't going to buy it.''
But ''the six major record companies have agreed to spend $270 million on new talent,'' says Bob Bowden, spokesman for Minister for the Arts Lee.
All sides agree that the problem isn't a lack of talent. The group Silver Chair, despite its similarity to Pearl Jam, is winning praise from critics and dominating Australian music charts. Other promising bands include You am I, Magic Dirt, Front End Loader, and Spider Bait. The Melbourne club scene, the traditional center of Australian music, remains relatively vibrant.
The problem is getting anyone outside of Australia to listen. Music, like other Australian industries, is dogged by the country's small population of 17 million. Not enough money can be made in the small market to fund the high costs of promoting and touring a band overseas.
''The market is just too small to actually launch a band internationally,'' says Phil Tripp, publisher of the Australasian Music Industry Directory. ''It's like talking about a Texas band that can't break out of Texas.''
Low budget independent or ''indie'' labels, which often give new bands a chance, are also suffering. Foreign-owned major labels, touting popular US bands, are dominating the small Australian market that exists.
''The trade industry is controlled by the majors. There is no role for the indigenous record companies,'' says Cross, ''and the [major label] system works well for American groups who want to move into Australia, but not the other way around.''
The handful of indies that remain say they can thrive on a small slice of the market, if the government will change its policies.
Independents ''are popping up everywhere,'' says Andrew McGee, head of distribution at Melbourne-based Shock Records. ''The majors say 'Oh, let's just squeeze this one out,'' but they keep coming.
Midnight Oil manager Morris says the answer is simple. A government requirement that radio stations play Australian music 30 percent of the time should be changed to a requirement that they play new Australian music 15 percent of the time.
''The music industry is booming, it's a $1.7 billion industry, but only $200 million of it is Australian music,'' Morris says.