Yes. There are reserved words which cannot be registered. These are words which are restricted under Commonwealth legislation such as 'Federal'. A list of these words can be found on the au Domain Administration (auDA.org.au/policy/">auDA) Policy website.
Place names are also reserved. Any Australian place name listed on the Australia Post Postcode Database as well as "Australia" and the names and common abbreviations of the Australian States and Territories cannot be registered at this stage.
The au Domain Administration (auDA) intend to lift this restriction sometime in the future. The Australia Post Postcode Database can be found at http://www.auspost.com.au