The project to acquire self propelled 120mm mortars for Army came under Phase 4 of Land 112 (ASLAV acquisition program). This project was to acquire around 20 such vehicles. Given normal artillery batteries are comprised of 6 guns, and infantry battalions are equipped with a Mortar platoon of 6 Mortars, I'd say that such a purchase could of probably established 2-3 batteries at best.
I'd say that the reason it was cancelled was 2-3 batteries of such vehicles wouldn't make a huge difference to Army, and Army realised this. A curious fact was that during the drafting of the White Paper 2000, Army never seriously asked for this capability. Apparently the idea came from someone (or somebody) outside the Army.
By the time of the Defence Capability Plan however Army managed to successfully argue that 2 Squadrons of M1A1 Abrams tanks on the other hand would make a HUGE difference to Army capability and this part of Phase 4 of Land 112 was canned and Land 907 (replacement tank) was approved.
The 120mm Mortar project was designed to equip Army's Cavalry units with an integral in-direct fire support capability. As such 2 Cav Regt and 2/14LHR (Army's ony 2 frontline ASLAV units) would have been equipped with the Mortars. This capability requirement however still exists as does Phase 4 of Land 112, according to the DMO website, so we may yet see this project back on the cards.
In addition the Army currently has a new project called Land 5000 which is still in it's definition phase. This phase is studying all aspects of Army's fire support requirements in coming years.
Nothing concrete has come out of this yet, but it's findings will no doubt influence upcoming projects such as Land 40 phase 2 (area direct fire weapons for special forces, infantry battalions and armed recce units, and is expected to include auto grenade launchers, new short range anti-armour weapons and possibly short range mortars), Land 17 and any new 120mm Mortar purchase.
HIMARS would make a very useful contribution to army capability and firepower, but I think a more pressing requirement is for the Army's entire artillery fleet to be standardised on 155/52 Calibre artillery pieces and acquiring a sufficient mix of towed and SP guns to completely replace ALL of the Australia's current artillery fleet.
With the move to a total 155mm calibre fleet and the (inevitable) acquisition of new generation guided munitions for this artillery fleet (probably including BONUS and EXCALIBUR) I think Australia would be very well served by it's artillery capability. I personally would only recommend an acquisition of HIMARS or similar once this had been achieved, even though a significant firepower boost could probably be achieved with a fairly minimal HIMARS purchase.
I'd think a relatively small purchase of HIMARS could make a massive capability contribution to Army firepower. Given that it'd be used in combination with "traditional" artillery only 1x battery per Artillery regt could be a very useful addition. Given that Army currently only operates 3 Arty Regt's, only about 18 HIMARS operational vehicles plus attrition and training vehicles would be required. The total number at that point would not exceed 30 vehicles.
As stated earlier, I think focusing on the "traditional" gun fleet is a more pressing requirement at present though.
Here's a decent pic of the proposed ASLAV based 120mm Mortar system.
http://images.janes.com/defence/land_forces/news/jdw/jdw010129_1_p.jpg