We import this from the Us but quarantine laws mean it is sometimes picked up and destroyed.
I eventually found out why-after numerous emails to different departments.
"The exact timing for the inclusion of Xylitol in the Customs (Prohibited Imports) Regulations 1956 is unknown to myself and present colleagues at the TGA. I was able to trace its presence in these regulations using the historical archives on the ComLaw website back to 1991 which was as far back that this particular site went.

The control on this product was instigated as a result of concerns for public health due to the inclusion of this substance in particular products. I believe the inclusion in these products was not as a sweetener. It was decided at the time that the most appropriate control to limit this problem was through import controls. The flow on from this decision has only become an issue in more recent times where it is more common to find food, dental products and other therapeutic products containing xylitol."