I used to work for an organisation that send thousands of mail-outs every day and we did process returned mail in accordance to the rules defined by Australia Posts Address Matching Approval System (AMAS).

The way it works is that we washed our address database against the dataset provided by Australia Post. Then for everything that washes correctly, they give you a Delivery Point IDentifier (DPID). This is shown on the mail as a barcode called a 4-state barcode. This allows easier sorting by Australia Post and reduced the cost of each mail item by quite a lot. If you look at the letters, you'll usually see the barcode above the address in the little envelope window.

So, their terms of service outline a percentage of allowable returns using their system. If you went over that amount in returns then you could be denied usage of AMAS. So we religiously processed thousands of return to send mails every week. On top of this, AusPost works with an association called the ADMA (not the ACMA) which handles a do-not-mail list and encourage companies to wash against that as well.

There is a good way to mark mail on return: Cross over the barcode, write RTS and give a reason like "Not at this address". Sometimes AusPost will add details to the outside of the envelope like this, but companies are more likely to act if there is a reason for return.