Well it's half true:

See http://www.snopes.com/politics/religion/australia.asp for the reference to "Muslims out of Australia". Note the lack of reference to "A Christian Nation" as this was added haphazardly after the fact.
Nor does he ever talk about "English" or even "language".

For the actual transcript that this letter is derived from, see
http://www.abc.net.au/lateline/cont...05/s1444603.htm
or
http://www.treasurer.gov.au/tsr/con...ts/2005/123.asp

Note however that his actual words are:
PETER COSTELLO: "What I've said is that this is a country, which is founded on a democracy. According to our Constitution, we have a secular state. Our laws are made by the Australian Parliament. If those are not your values, if you want a country which has Sharia law or a theocratic state, then Australia is not for you."

Which is quite DISSIMILAR from the quote from the email below which claims "Most Australians believe in God. This is not some Christian, rightwing, political push, but a fact, because Christian men and women, on Christian principles, founded this nation, and this is clearly documented..." Actually neither the word "god" nor the word "Christian" was ever used in the interview.
See http://en.wikipedia.org/wiki/Secularism

Amazing how "right-wing American" it does sound though.... Typical of any fanatical group - taking bits and pieces of their religion to persecute others and seclude themselves - while conveniently ignoring the part of their religion that promotes inclusion and tolerance. As if rewriting and distorting US History wasn't enough, now they (the right wing) needs to distort quotes from politicians of other countries to energize their base - which sadly, after looking at a number of message boards and blogs is appearing to work. I'm not really sure what it says about a group so eager to justify their beliefs that they have to make stuff up.

FYI: Australia was founded by England as a penal colony. It's Constitution explicitly prohibits the federal government from "imposing any religious observance". If only "/Congress shall make no law respecting an establishment of religion,"/ in the US Constitution (Bill of Rights) would be interpreted as clearly.

Australia Government:
http://en.wikipedia.org/wiki/Australia

Complete Text from US Bill of Rights:
http://en.wikipedia.org/wiki/United...ill_of_R ights

-CF