Oh wow, you said what nobody says or asks but that's the right question. Australia has a humongous uninhabited land mass or even Canada. They should have fit in there very well. I always feel that the bloodshed will never end in that region due to that 1940's decision and also religion being the opium of the masses makes it quite difficult.
I believe for peace to prevail, Israel must let Palestine be a free independent country, something which they don't want to allow. The way things are going we won't see peace there any time soon.
As always thank you for stopping by and wishing you the very best :}