That is very poor customer service that they didn’t make it clear why the additional information was required. If a business is transparent and honest, they are more likely to get long term loyal customers.
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It is irrelevent whether Paypal has an Australian banking licence.
They operate in Australia and facilitate cross border money transfers.
Therefore they come under Austrac reporting rules for every transfer of money from payer to payee if it is cross border (or over $10k within Australia), and they have to follow the rules for authenticating customers who want to use Paypal.
Those rules are at a minimum full name, address or DOB, and verified by an accepted document like a passport or drivers licence which will give all three of those.
Just ask a few of the banks and casinos about their millions of dollars in Austrac fines when they have not followed the rules.
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Every time I use PayPal all my details are shared with the courier. My email, my address, my phone number. All purchases are between the seller and buyer, not the courier. A better way is for the courier to advise the seller about delivery, and then the seller passes it on to the buyer.
Remember Privacy Policies mean nothing - when there are hackers about !
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Now that they have joined the buy now pay later crowd their good customers will have an added value.
Good on you !
My recollection of what happened with PayPal is that it was just a service to make credit card payments to businesses in the beginning and unless someone asked for it, you didn’t have a PayPal account that money could be put into or payments could me made from.
Then, and PayPal didn’t ask me if I wanted it (I didn’t), a new account appeared where transfers could me made: to it or from it. And roughly at the same time they said “to use any PayPal service now, you now have to give us more personal information”. Well, their wording was not “we’ll stop you using PayPal for credit card transaction if you don’t give us extra information”, it was just “we’ll limit your account”. But that meant stopping any credit card transactions.
Do other people have the same experience?
You can use PayPal to make payments, without having an account. You become a guest user. I did that for ages before getting a proper account. Then I realised I did not have the advantages of a PP account. And I have never had any advertising from PayPal for anything other than its own services. Also no spam from other places.
Not saying I don’t get spam, but its not from PayPal. I need to set up a fake ID as @benhelps has done, for those dodgy sites where you know you’re going to get spammed. I also need an email address with multiple aliases… I have a few on iCloud, and outlook, but it would be easier on one address, not spread over many.
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Blur from Abine still has a free version that allows for unlimited (any number of) unlimited (they do not expire unless you delete them) disposable addresses for an email account that you have already (you don’t create a new one for or through Abine). You could create a fresh email address that you want all the disposable addresses to be forwarded to, you could create this with a normal provider eg Yahoo, Gmail, Hotmail/Live. You have control of the disposable addresses through the Blur website, you can suspend or delete an address as needed. Every address has the site it was created for, the disposable address, the number of emails forwarded through the address, the address it is forwarded to (free version I think is only one possible but I have never used another anyway), Forwarding on/off, deletion of the address, send an email from the masked address (never used it from within the site), date the address was created, and last date an email was sent to the disposable address. It’s also a browser cookie controller and is a password manager for sites which it stores in Abine’s Cloud.
A snip of one address that is a disposable from my very long list of addresses in Abine:
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Thanks for that suggestion… I’ll have a look 
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Not to be outdone in their marketing of information, Mastercard…
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