Well, the short point is that a public game which aspires to appeal to the general public both to play and watch should not rely on private schools to produce, as a by product of their missions to educate, Wallabies.
The long point is:
One cannot blame the schools - they were playing the game before there was an ARU or even, I think, a Southern Union (which became NSWRU).
The schools do not have to kowtow to anyone and can emphasise or de-emphasise rugby or any other sport as they see fit and, increasingly importantly at some of them, as their demographic shifts.
This last fact creates an additional vulnerability for the ARU - additional to the fact that they, or the NSWRU or SJRU or their equivalents, do not provide a properly structured and reliable competition for kids 15-18 who do not attend these private schools. Worse still, as is their right, the schools prevent their kids from playing club/rep rugby outside the school.
Then you have the fractured school systems which by historical accident play one another but increasingly rarely do they play any school from another system.
Its not the schools' job to promote the joy of union.
As i understand it league does provide comps: Harold Mathews, SG Ball. I don't know about AFL.
So if you are a budding elite player of a collision sport played with an ovoid ball who is not at one of these schools the temptation to play league and to get competition that is a known quantity from year to year must be tremendous.
It is only likely to become more so as more money creeps into league thanks to its recent TV deal.