One of the things I dislike in politics is people pointing to Northern European quasi-socialist countries and shouting 'if Norway/Sweden/Denmark/Netherlands/Finland can do it, why can't we?'. Healthcare and schooling are always prime topics, but cycling occasionally rears its head. There are many reasons why it would be incredibly difficult to implement such a system in Sydney, and the main two are geography and culture.
Geography is the obvious, we have a whopping great harbour in the middle of the city, a high level of urban sprawl, and an undulating city centre. A lot of this comes from building a city on the coast. In short it would be bloody hard to get around, and damn near impossible for anyone who isn't in good shape. Also we don't have a culture of cycling, and that is very hard to create artificially. As much as we have a few cyclists on this board, they are a very small minority and widely derided (rightfully so). Government created cycleways have been practically ignored (eg M7, Epping Rd).