This is incorrect (which is lucky, because it would both be extremely unreasonable and impossible to enforce). You can only be fined if you are driving so slowly that you are causing an obstruction.

Citations:

NRMA: https://www.mynrma.com.au/cars-and-driving/driver-training-a...

Australian road rules: http://www5.austlii.edu.au/au/legis/sa/consol_reg/arr210/s12... -- key paragraph: "a driver does not unreasonably obstruct the path of another driver or a pedestrian only because [...] (b) the driver is driving more slowly than other vehicles (unless the driver is driving abnormally slowly in the circumstances)." (Note that these rules form guidance for the States, so there will be per-state differences -- see below)

Western Australia is the only state which explicitly defines "too slowly", it's 20km/h below the limit, and it only applies to freeways. https://www.whichcar.com.au/car-advice/is-driving-slow-illeg...

Any idea how that worked out in practice?

Anyone can claim their ability to safely control the vehicle would have been impaired at $cited_speed + 1 km/h.