What current case law in Australia has challenged employer's rights to conduct cyber vetting of social media websites for the purposes of screening job candidates and the proper or improper use of such information?
I'm not aware of any cases for the recruitment of employees.
Discrimination is not legal under various anti-discriminations Acts, but vetting per se is not necessarily a discrimination under these Acts. Checking public social media sites to gauge someone's social skills seems reasonable, as does checking for evidence of drug abuse.