"There is no computer anywhere that can look at any given image and deem whether it is illegal," Wheeler said.
"We aren't talking about small holes a brilliant teenage hacker will get through; we are talking about holes that you could haul a B-Double truck through."
He said the best Internet content filtering scheme would be to sever the undersea network cables connecting Australia to the rest of the world.
"We could just kill the Internet and run a national Intranet, or maybe employ a whole state to monitor everyone else and create the 'Internet Lite'."
"Mum and dad will be the ones inconvenienced; the people after illegal content will still get it."
Wheeler said IP crime can only be fought by coordinating international law enforcement.
He said the government should "question what is legal and illegal" if international support is impossible.
A network administrator for a Queensland bank said the system could be bypassed by blending illegal and legitimate content, hosting content through open proxies outside Australia, or sending data through mail and DNS ports if open ports were closed.
"It's unbelievable how easy it is to beat this system," he said.