There are many flags around the world that feature the British Union Jack in the top left corner (the canton), a result of the vast British Empire which peaked in the late 18th century. Apart from Australia, other national flags which also feature the Union Jack in their canton include New Zealand, Fiji, Tuvalu, Cook Islands, Niue, and 12 British Overseas Territories, including Bermuda and Anguilla. The American state of Hawaii also features the Union Jack in its canton, despite the fact that the United States emphatically broke away from the British Empire in 1776.
Australia's and New Zealand's flags are often confused
The flag which shares most in common with Australia's flag is New Zealand's. The two flags are often confused, and at many an international event one has been mistakenly displayed in place of the other - much to the embarassment of the dignitaries present at the time. There is active debate in New Zealand around changing their flag to a new design, and one of the reasons often cited behind making the change is the New Zealand flag's confusing similarity with the Australian flag.
The Silver Fern (Black, White and Blue), which won the first of two referenda
In 2015/16 the country held two referenda aimed at replacing the flag. The first referendum was held to select a new design from a range of possible alternatives, and then in a second referendum the most popular of the alternatives was pitted against the incumbent flag. Unfortunately, the incumbent flag won the vote, 57% to 43%.
Australia has come a long way since the days of the White Australia policy (actually a collection of policies, not one specific policy per se), which actively limited non-British immigration and virtually prohibited non-White immigration to Australia. With the embrace of modern, multicultural, pluralist policies beginning in the 1970s, Australia is now a very different nation.
Australia abolished the racist White Australia policy but kept its colonial flag
The White Australia policy was effectively ended in 1973 by the Whitlam government. Since then, Australia has maintained a large-scale immigration program that does not discriminate on the basis of race or religion. Modern Australia is a society made up of people from diverse backgrounds and cultures - yet our flag harks back to a time when Anglocentricity was very much the order of the day.
By having another country's flag in our own flag, it suggests that we are subservient to that country. The Union Jack's placement in the top-left corner of the Australian flag would typically be taken to mean that Australia is a colony of Great Britain, which is of course no longer the case. In this sense, the current flag is an outdated anachronism - a legacy of Australia's place in the now defunct British Empire.
The United States of America and Canada are prime examples of former British colonies which have adopted new flags to reflect their independent identities.
The old Canadian Red Ensign
Canada switched from a British Red Ensign, which had been in use since 1868, to the current maple leaf design on 15th February, 1965. The change to a new Canadian flag in 1965 was the culmination of many decades of national debate on the issue which had aroused strong emotions on both sides. The 15th of February is now celebrated annually as National Flag of Canada Day. Canada of course is also still a monarchy, with the British monarch as its Head of State, and continues to be a member of the Commonwealth.
The old Grand Union Flag, from the original union of American colonies
In the United States, the change to a new flag occured much earlier - on 14th June, 1777 - with the passing of an act by the newly formed Continental Congress. The original American flag had just 13 stars, reflecting the number of original colonies which constituted the newly formed union. The flag, often referred to as "Old Glory", is thought to be designed by New Jersey Congressman Francis Hopkinson. It has undergone many iterations, mainly during the 1800's, each time adding new stars as the union grew with the addition of new states - the design has changed some 26 times since the original version.
The flag of the British Raj in India, 1880-1947
In addition to the USA and Canada, other former British colonies which have changed from their colonial flags to new flags include South Africa and India.
So if history is anything to go by, it seems there is some degree of inevitability about Australia changing its flag - but the question is when, and to what.