When Australians talk about 'Indigenous writing', 'Indigenous writers' and 'Indigenous literature' in Australia, they usually don't mean 'writing in Indigenous languages'. They mean English. You'd never guess that Indigenous Australians wrote in their own languages from reading Lisa Slater's review  of Penny van Toorn's recent book (2006) Writing never arrives naked: Early Aboriginal cultures of writing in Australia. (Canberra: Aboriginal Studies Press). Go instead to Mary-Anne Gale's (1997) book Dhaŋum Djorra'wuy Dhäwu: a history of writing in Aboriginal languages. Adelaide: Aboriginal Research Institute, University of South Australia. (and go to the end of this post to see how to get a copy!).
In fact, Van Toorn does have a little about early writings in Indigenous languages, but not much, because she mostly focuses on the east coast of Australia and Tasmania. The English monolingual mindset has always been very strong on the east coast since the early settlers spoke mostly English, or Gaelic, which was not highly valued as a language of learning. The monolingual mindset was less strong in South Australia (which, with the Northern Territory, is the focus of Gale's study), since the early settlers included a relatively large group of speakers of German. German was one of the major languages of science in the nineteenth century, English speakers studied it, and the SA German settlers published in German and ran German language schools until World War 1.
That's perhaps why bilingual education in Indigenous languages, and the production of literature in Indigenous languages has been strongest in South Australia and the Northern Territory, (which was part of SA during its first effective settlement from 1863 - 1911, and which, after 1911, retained close links with SA in relevant institutions such as churches and the law). Van Toorn suggests (p.14) that the German missionaries used the local languages because they knew very little English. Much more relevant are the language policies of the London Mission Society and the Lutheran mission societies, as well as the early SA missionaries' discussions with the Governors of South Australia, about what languages to use in schools .