" it took so much longer for Australia to get FM radio"

What were they thinking, assigning TV channels in world FM band?

Its an Australian bureaucracy thinking & implementing anything that works, or is efficient is not acceptable.

Well actually, although the decision seems shortsighted now, it was the only practical way at the time of extending TV to regional areas. UHF would have needed 10x the transmitting sites, at least, and seriously powerful transmitters. UHF tuners at the time were as deaf as posts.

With Band 2, at least "deep fringe" coverage was possible. Band 2 was a good compromise between the over the horizon fringing performance of Band 1 without its susceptibility to power line noise.

One idea that was trialled was FM radio on UHF. It would have suited the mainly urban listeners. By all accounts it worked quite well. But with the "shut down local manufacturing" agenda of the Whitlam govt, that never was going to happen.

No, or at least not as such. In the years prior to analogue TV shutdown, ABHN-5 was shifted to channel 5A and probably to allow FM stations such as 2KO, NEW-FM and 2NX to occupy space. In Wollongong, the ABC was already on 5A due to the tradition of spacing channels with a dead channel between them so 2OO and 2WL could shift to FM with no issues.

In the wider scheme of things, there were either fewer stations shifting to FM or in the case of the capital cities, the allocated channels were outside the FM band.

From wiki on early Aust. television policy:
"The Menzies government was concerned about the long-term viability of the new industry and worried that it might be called on to bail out struggling stations and networks if the economy deteriorated"

He needn't worry; turned out quasi-monopolistic commercial stations would be rolling in money during booms and recessions!

If he's worried about economics, then don't sabotage FM band (forfeiting economies-of-scale with incompatible FM system)

I doubt that selection of bands that were different to elsewhere in the world had the desired effect. It was supposed to help protect local industry from the ravenous effects of foreign imports on the basis that fitting a different tuner to products destined for a small market would not be cost-effective. The Commonwealth Government took a sledge hammer to Australia's tariff wall in the early 1970s and successive regimes kept it going, to a stage where we are on free trade agreements with all key economies except the EU and UK. It has been recently said that 70% of Australian trade going both ways is subject to free trade agreements.

As far as I can recall, the last Australian-made televisions were NEC and Panasonic? I may be wrong here but I believe they had assemly lines in Penrith or some other part of Western Sydney. Those operations closed up before the 2000 Olympics and the eventual shift to digital television.

These days, the last thing a TV maker will care about is the band their products need to tune to. A small change to the set's firmware will get it done and a television's auto-tune feature will have every channel available to it tuned in less than 30 seconds. What a TV importer will not like is a reintroduction of tariffs so that local assembly can resume. That would become their biggest hurdle.

On a separate but relevant issue - Japan is experimenting with 8K resolution. Here, we are force-fed 4K televisions that will most likely never receive a 4K signal. Out of the 35 or so channels each broadcasting market has in the eastern states, only five or six channels are broadcast in FHD, which to put things in perspective, could be called a 1K signal. The reason? Not enough bandwidth has been allocated for every channel to broadcast in 4K. It would be nice if the ACMA would come up with a solution to that dilemma. It won't happen though - the ACMA is a government statutory authority. It'll take them another 20 years to put the term "4K" in their style manual.

"Commonwealth Government took a sledge hammer to Australia's tariff wall in the early 1970s"

I didn't have to worry as I already had a nice Yamaha FM stereo receiver purchased duty-free in 'Honkers' at that time.
The only incompatibility it may have had would be a De-emphasis curve of 75us (barely audible)

The other problem: Lack of FM stations

At that time the Aust Polies were, embarrassingly, walking-back their previous policy on the international FM band.

The benefits that accrued by adopting standard FM were many: For instance, first Bris. commercial FM station, 4MMM. was able to buy an RCA 5kw single cabinet transmitter 'off-the-catalogue' benefiting from the economies-of-scale in vibrant US FM market. This transmitter was remotely located from their Spring Hill studios at Ch-7 tower. It was almost 'plug & play' as its voltage was same as US commercial - 240v single phase 9kw max. And its FM-exciter was switchable to Euro 50us Pre-emphasis! The RCA had excellent fidelity with only 0.5% THD.

Actually, the Whitlam government of the day wasn't embarrassed by any policy backflip, they were happy to ignore the civil service advisers and blame the "stupidity" on their political predecessors.

By 1972, no-one was building large broadcast transmitters in Australia anyway, so there would have been no tariff payable on the RCA transmitter.

Following refers to TV transmitters but I suspect it would be the same for FM:

About 1970, AWA who used to build transmitters, discovered NEC in Japan and decided to represent them here. Jewel-like build quality, unimpeachable reliabilty and excellent documentation made NEC the choice from the early 70s on. When colour TV started here, sites with NECs installed required no changes.

Does anyone know what brand of FM transmitters Aust.-ABC-FM first used?

PMG / Telecom were responsible for putting all ABC output to air. They'd usually buy NEC.

Not much is known about the original ABC FM transmitter at Gore Hill in the 1950s, that got shut down when TV expanded into Band 2.

On the subject of NEC transmitters, have a look at this walk-through tear-down of ATN7's analogue transmitter, not long after it was shut down.

https://www.youtube.com/watch?v=mR_wJkxKSXU

This transmitter replaced an AWA transmitter that was installed when the Mowbray Rd site was established in 1960 or 61. A classic high level modulated design, it soldiered on for 6 or 7 years after the switchover to colour.

Re first FM stations in Oz in 1948:

https://trove.nla.gov.au/newspaper/article/49914307

Also this, from Wiki:

FM broadcasting started in Australian capital cities in 1947 on an "experimental" basis, using a (monaural) ABC national network feed, consisting largely of classical music and Parliament, as a programme source.[1] FM receivers were expensive and the audience consisted largely of hi-fi enthusiasts. The transmitters (operated by the PMG's Dept) were shut down in 1961, as much of the standard FM band (98–108 MHz) was reserved for TV channel 5 (102.250 video carrier). It had been envisaged that FM broadcasting would take place on UHF[2] but this idea was abandoned as impractical and uneconomic, and following a decision by the reformist Whitlam government,[3] in 1975 Australia's FM band was opened, aligned with most of the rest of the world.