It’s bizarre that the identification documents your government wants you to have are not covered by your taxes.
you do not need passport inside Australia. But in other hand you still paying for driver licence/photo id.
Much of that cost is third party insurance, though. If you are in an accident and someone is hurt, the government will cover their rehabilitation. Or yours, I guess if you are the one hurt.
I expect that much of the cost of a passport funds the embassies and consulates around the world. At least in theory.