As AD has already mentioned your maths is a bit off – we have two more battalions now than we had in 1999.
More to the point, you are falling into the trap of determining capability by counting infantry battalions. There is so, so much more to having a capability than just counting the number of colours on parade. Even just the infantry battalions themselves are so much more capable than in 1999, in both an absolute and relative sense. They are all full strength, equipped with the best (or very close to it) individual equipment and small arms in the world, with organic mobility, and training to work outside of their own little bubble. Whereas outside of perhaps 3 Bde, in 1999 the RAR was at a very low state of readiness.
More importantly though, the Army now has other combat and combat support capabilities to actually be relevant on a modern battlefield, and the capabilities in these areas are growing at a rapid rate. This is no surprise – all the experience on both exercises and operations point to the fact that unsupported manoeuvre forces aren’t particularly useful. It is all the enabling capabilities – long range fires, ISR, EW, cyber, GBAD etc – that are needed simply to survive, let alone close with and kill the enemy. Ask the Ukrainians or the Syrians if they would prefer another rifle battalion or a battery of HIMARS/modern UAS/an EW capability etc, based on what they have learned.
Thankfully, our Army is rapidly catching up, and evolving the force to be useful in the future.* It is perhaps worth pointing out that the officer that is reducing the strength of the infantry, and mechanising half of what remains, has a light infantry back ground and grew up in 3 Bde. It is also no coincidence that the current Comd of 3 Bde is an armoured officer, and light infantry officers have commanded 1 Bde in the recent past, in an effort to introduce some diversity of experience and thought.
I also don’t know why you think we can only deploy commandoes/SASR at short notice. The Ready Battle Group, currently based on 1 RAR, is just as ready as it has ever been. More so, really, since it is now a proper all arms battle group with strategic mobility (both air and sea) to get it somewhere needed in a hurry.
*Incidentally, for a case study on how to do this wrong, look at the British Army. In an effort to save regimental cap badges they have an entire division worth of light infantry battalions with no real support, nor a meaningful role. Meanwhile, they are going from three armoured brigades to two, and it looks like one of the planned Strike Brigades will be cut as well. It is rapidly reaching the point where in the near future the Australian Army might have a larger and more capable armoured capability than the one which once fielded three armoured divisions to guard the inter-German border. The British Army have very much reached the point where tradition and history is actively undermining their army, rather than supporting it.