VPN in Australia
Why you should consider a VPN if you live in Australia
The current government wants to pass on fines to people who download movies / TV / music and start blocking the sites that make this possible. Previously this has been blocked by the Supreme Court after a long fight with iinet, but this looks like going back to the courts and has a very real chance of passing this time.
Torrents
When you connect to a torrent, your IP address shows up in the swarm, what is usually done, the MPAA and subsidiaries connect to the swarm and not the IP addresses of all connected peers. They will then send a letter to the ISP that owns that IP and tell them to pass that letter to whoever had that IP address at the time. The issue in Australia could be that the letters from the media companies will be passed on to the end user, and the torrent site (e.g. piratebay) would be blocked.
Streaming
Streaming sites are a bit different. The media companies would have to serve an injunction against the site, requesting logs of what IP accessed the site and which content it accessed. They will then use this information to serve against the user. This situation is very rare, they will usually just have the site taken down. The issue in Australia could be that the site will be blocked and you will be unable to access it. What other sites will be added to this block list would be left up to the governments discretion.
A VPN encrypts your traffic and changes your end point, essentially making it appear as though you are in another country, coming from a different IP address. If the VPN provider does not keep logs, your activities cannot be traced back to you.
VPN provider I have selected at the moment.