I think it's the tradition of rugby that's breaking it. We see more schools popping up as the population grows but I don't know of many more rugby schools.
The population has increased but the rugby community hasn't
My theory is this: The immigrants map in Australia has changed. At the verge of 19th century most of the immigrants came from Europe, especially England, Wales, UK, countries with rugby tradition so they created British schools with british traditions like rugby and cricket. Nowadays most of the immigrants don't come from UK. Many comes from Asia, Americas and even Africa, so they bring their traditions and rugby is not one of those.
The new rugby supporters come from New Zealand and Pacific Islands. Most of the Kiwis stick to their local Super Rugby franchises and the NRL is attracting many Islanders and some Kiwis.
At the same time AFL, NRL and soccer have grown exponentially