Today, the question is whether the flag is still an appropriate symbol for Australia. It was created for a Dominion of the British Empire; the decades since have seen the whittling away of the constitutional links between the UK and Australia. (Even their Heads of State are now legally separate.) The two are now separate countries, though they are still close allies; besides, Britain is now a member of the EU, and Australia is also turning to her neighbours for economic reasons. The emotional ties have also been weakening; a common language (more or less!) has been maintained, but Australians are becoming less and less "British" in ethnic terms, loyalty to the Crown is declining, and so forth. An ex-colonial flag seems to have far less significance for Australia than it did in 1903.
Finally, the Union Flag is such a striking symbol of the UK that the current flag cannot be considered "quintessentially Australian" - it is British with "a little bit of Australia in the bottom and the far right". Can that be right for a fully independent state?