If you posted with a PayPal approved service (Registered Post / Click and Send etc), then, firstly check the Status of the tracking number on the Australia Post website

then contact Paypal and let them know the tracking number and what Aust Post site says.

often a 'missing' item is just sitting at their Post Office awaiting collection.

if you only used regular mail, with no tracking, you'll have to refund their whole payment if the item is lost in the mail