The word is occasionally used to mean gay, although the meaning of small imaginary creatures is still much more common.

I wonder if it's more commonly used that way in Australia?

The Australian usage is more along the lines of an weak or effeminate man, similar in usage to pansy.

Source: http://www.freerepublic.com/focus/f-news/1615908/posts

tl;dr Someone dolt at the Queensland zoo thought fairy penguin would offend the gay community so they changed the name to little penguins. The gay community responded to the change calling it ridiculous. No one was offended. It was NOT an issue but merely and amusing footnote.

Why the BBC author chose to dredge up a 13 year old political non issue is beyond me.

Especially when there's a town called Port Fairy not ten miles west. https://www.google.com/maps/place/Port+Fairy+VIC+3284