Lyn, if you're looking for fly fishing near Sydney you don't have to look too far. The streams up in the central tableands are good for trout, which are happy to take flies. The best locations are the smaller streams (OK, creeks for us aussies) and it is surprising how big a fish you can find in so little water. The rivers have a lot of carp, so less trout. Even with the drought you will still find fish around Oberon, Tarana, Bathurst and Blayney. All are good, and only about 3 hours drive away (used to be less, but several election upgrades have ruined the roads). Because the creeks are small, look to spend time walking, as the best method is to travel the creek as you fish the likely spots. Not an unpleasnt way to spend a day and get some excersize.
I have to admit I am not realy a fisher, more of a feeder of fish. my brother catches them on old sandwiches with bent wire and string (literaly sometimes) while I feed them from expesive tackle on light line. The recent game hunting licence covers some areas in the same region, so if you go that way (SSAA is agent I think) you could double up for the trip, feral hunting AND fishing. Just like it used to be. We do have licences (unfortunately) and closed seasons (Fair enough).