Except that it was colonised by the aboriginal Australians. And the North is fairly tropical, so I too have often wondered why nobody bothered to check it out.
From an official and realistic point of view, the Indonesian peoples did not colonize Australia by the same reasons Arabs didn't colonize Madagascar or Romans didn't colonize the Canary Islands: those territories didn't offered them anything that could motivate an eventual colonization.
Indonesian peoples were not pushed by others to search new lands and they have whatever they needed in their archipelago.
For those who love fantastic or bizarre explanations, I once read in a blog of anthropology a discussion regarding the survival of folk memories in the area related to extinct megafauna like the Megalania, that could have discouraged the peoples of the Malay archipelago to travel to Australia (in a similar mood like middle-ages European sailors feared to travel too westwards into the Atlantic ocean).
Of course, it's doubtful that folk memories about the Megalania could survive for several milennia (even if it's proven that the Malagasy conserved folk memories about giant lemurs or hippos for more than 1000 years); anyway, the Indonesian knew of many large species of Varanus in the zone, so Megalania could have been a plausible (and terrifying) creature for them.