This comes up often in these discussions but, barring any indigenous lands, there's nothing especially inhospitable about central aus. Las Vegas is in the middle of a damn desert, and Arizona/New Mexico are both extreme climates compared to much of the US but they are still livable and many people actually prefer it. I can't see why this would be any different in Australia...
It’s not about how possible it is to live, it’s about places people actually want to live. There is virtually unlimited land with good climate. But people don’t want to live there because it’s far from everything. Most people have picked paying more to live closer to events, jobs, stores and friends.
Australia doesn’t have the population to start a new major city in the center. There are still multiple cities like Adelaide which could grow instead.