There's probably something in that; for a good while the Socceroos looked to be propped up by the first and second generation sons of Italian, Greek and former Yugoslavian immigrants.
Now, as the generations slide by, integration continues and the familial ties that bound them to the round ball code loosen. There's more competition for athletic talent in Australia than anywhere else, no other country is serious about four football codes.
There's enough Greek and Italian heritage talent playing league to supply pretty much all their squads for the recently concluded world cup.
I personally think the lack of a second division of the A-League isn't helping either; managers of football clubs by and large don't give a toss about developing players for the national side, so they're going to play their best XIs. This leads to a bottleneck of talent and, with nowhere in Oz to go, younger players are going to take the option to move abroad and, like the instance Cokes mentions above, potentially be lost to the Socceroos.
Plus, obviously, closing down the centre of excellence was Mr Magoo level short-sightedness too.