"ALL THE BOOKS we read were full of trees we had never seen, most of our schooling was about places that we knew nothing of. We were actually educated to be exiles."

Thomas Keneally, the Australian author of 13 novels, many of which (Confederates, The Chant of Jimmie Blacksmith,) have been successful in America and England, has shaken off his schooling and gotten over the formerly pervasive view among Australians that everything worth writing about, and all the writing worth in England.

Keneally, born in 1935, and most of the men and women writing in Australia today, grew up in the astonishingly lush swath of fertile farmland around the southeast corner of the country, but they believed it when their history teachers told them that Australia was the harshest outpost of the British Commonwealth.

The country is just beginning to free itself of a lousy self-image. Shirley Hazzard, who lives in New York but was born in Sydney, had never used an Australian setting until the beginning of her prize-winning 1980 novel, The Transit of Venus. "Australia," she wrote in that novel, "required apologies and was almost a subject for ribaldry."

Patrick White, Australia's only Nobel Prize winner for literature (1973), and Christina Stead, thought by many to be the country's best candidate for a future Nobel, both lived abroad for many years, but eventually returned home. Stead's best-known novel, The Man Who Loved Children (1940), is set in Washington, where she was living at the time she wrote it, but portrays events of her Sydney childhood. White and Stead, Keneally and Hazzard, and good movies like My Brilliant Career and Breaker Morant, all have helped to cure Australia's long-standing inferiority complex, known as the "cultural cringe." There have always been Australian writers of distinction -- from the authors of convict memoirs to the turn-of-the-century women epic-writers (H. H. Richardson, who wrote The Getting of Wisdom and Miles Franklin, author of My Brilliant Career) -- but pride about Australian literature is a recent phenomenon.

One practical reason for the past decade's boom in Australian fiction is that the government gives grants to writers and subsidies to publishers of serious fiction through a Literature Board set up in 1973. These days about 40 new novels are published every year; before 1973, the average number was three. R. F. Brissenden, a Canberra poet who chairs the board, explained that free enterprise can't support the talent there is. Though, compared to America, it is realtively easy for a talented Australian writer to get published and become known, it is hard to make a living writing in a country with a population of only 15 million. A work of serious fiction is considered a best seller if it sells 10,000 copies -- 5,000 is good. Eighty percent of the serious books published in Australia are aided by the Literature Board.

Despite this official encouragement, the writers often run into trouble with the local critics when their books are published. Reviewers panned Patrick White's best book, Voss, and Australia's leading poet, A. D. Hope, called White's The Tree of Man "illeterate verbal sludge." THOMAS KENEALLY THOMAS KENEALLY says that Australian critics are catty about him because "anyone that publishes regularly overseas is not forgiven," and the big successes have always gone abroad to publish. Keneally has lived in America (most recently, doing research for Confederates, a novel about the Civil War published in the United States to enthusiastic reviews) and England. Critic Clive James, himself an expatriate Australian, once stood on a chair in a crowded London pub and shouted across to Keneally, "Don't go back, you idiot!"

Keneally feels the burden of being a standard-bearer for Australian writing: a Melbourne paper's review of his novel, The Chant of Jimmie Blacksmith, was headlined "Bad News for Australian Literature." "If you don't write The Charterhouse of Parma every time out," he says, "you're not just disappointing the reviewer, you are committing an act of national dereliction."

The novelist looks like a jolly, toothy, balding monk (he came within a week of being obtained a priest). He was a picture of ruddy peace as he looked out at the sunset over a full bottle of Johnny Walker (which he would finish without apparent ill effect in our hour interview) to the crescent of clear, empty beach below his house north of Sydney. There were large, regular waves, every one a surfer's dream, lorikeets singing in the trees, and the scent of frangipani and orange blossoms in the air.

"It's remarkable," Keneally said, "how melancholy Australian literature is, compared to the reality of the country. It's the melancholy of people not content with their place in the world, raised to feel like exiles."

In the first line of Keneally's tragic novel of convict life, Bring Larks and Heroes, Australia is called "the worst end of the world." "We don't feel that way any more," he said. "The place now feels like a possession. Though there is an immense well of Australian experience not consecrated by literature, Australians are hungry to have their past identified."

He is eager to do that; his latest book. The Cut-Rate Kingdom, is about Australian politics in 1942. Unfortunately, the book is not very convincing. "I wrote novels impetuously," he admits cheerfully, "like someone flinging a handful of darts at a board, in the hope that one will stick." Does he have a sense of urgency? "Yes, it's a bad way to work, but it's my temperament." FRANK MOORHOUSE ALONG WITH clean beaches and tropial flowers, Sydney has 342 sunny days a year. On a night when the city seemed to be getting half of its annual rainfall, I brushed past dripping banana trees to get to the small, dimly-lit house of Frank Moorhouse, Australia's most likely future candidate for international success.

Moorhouse, 42, is part of the Sydney "push" -- a word for an artistic clique from British thieves' slang for a gang -- which also includes Murray Bail and Peter Carey, two promising young avant-garde writers. All three regularly read the late, sea-mail copies of The New Yorker, where they find and admire the stories of Jorge Luis Borges and Donald Barthelme. Moorhouse also has an overwhelming admiration for John Cheever, even dressing in oxford-cloth shirt, shetland sweater and soft corduroy pants. The look, straight out of Cheever country, is outlandish in Australia.

Moorhouse calls his five books of short stories -- many of which are about the same place and the same group of people -- a "discontinuous narrative." "So it wouldn't be seen as a failed novel. I decided to pretend this was a literary form I'd been tinkering with."

Americans play large parts in Moorhouse stories -- particularly a Coca-Cola executive who goes mad in Sydney the way British traders used to in Borneo. Americans, Moorhouse writes, have "enervating enthusiasm." One character "had that sort of methodical mind which Americans seem to have -- they talk about 'projects' and 'resources' and so on."

"We are culturally incapacitated and dependent," Moorhouse says, "An Anglo-American composite miniculture." He speaks in the accent that Australians call "strine" -- which has a characteristic questioning lilt at the end of a sentence -- a speaking mannerism that Australians share with the Irish, some women, and the self-deprecating.

Moorhouse grew up in Nowra, on the south coast of New South Wales, with a father who was a Rotarian and a mother who worshipped the British royal family. He began work at 17 as an apprentice journalist for the Wagga Wagga Advertiser; his first stories were published in the late '60s and, with Literature Board support, he quit daily journalism.

His first collection got good reviews but caused consternation among booksellers who kept it under the counter. The main character of many Moorhouse stories is described as "unsavory," "a hero of dissipation," and a man who forfeited normality." Moorhouse, frankly bisexual, writes stories of contemporary urban life, in which men and women use each other for flashes of sensation. A friend of his said, "Frank does naughty things so that he can write about them." He explains: "I'm exploring the idea of intimacy without family -- now that procreation is not the only thing that gives sex meaning."

In many stories Moorhouse brings up to date the Australian institution of "mateship" -- male companionship which excludes women. In his story, "The Girl Who Met Simone de Beauvoir in Paris," three men sit in a restaurant and pun about a retreat into buggery ("There's always the back way") to escape the aggressive criticism of three feminist women. The Matilda of "Waltzing Matilda" fame, a feminist filmmaker pointed out to me, isn't a woman, as Americans think, but a swag or a bundle of provisions a man carried bouncing over his back as he went into the bush with his male mate. MURRAY BAIL MURRAY BAIL lives just a few minutes' walk from Frank Moorhouse. Bail has just cleaned up, in the Australian context, winning the Melbourne Age book of the year award with Homesickness, a very funny novel about a package tour group of 15 Australians visiting the great and made-up museums of the world -- a museum of marriage in Westchester County, for one.

Born in 1941 in Adelaide, Bail, who is an art critic as well as a fiction writer, wrote what is certainly the only remembrance of his birthplace ever to appear in The New Yorker. "A dull town," he said to me, "Nothing dangerous ever came out of Adelaide except my mother."

His Victorian house is as artfully under-furnished -- bare wood floors, kilim rugs, an Indonesian weaving over a lone sofa -- as his short stories, which are carefully and consciously avant-garde. "I have a taste for Latin American, Italian and French writers; Anglo-Saxon ways of thinking are what I'm against at the moment." HELEN GARNER PEOPLE from Melbourne call Sydneyites like Moorhouse and Bail "a tiresome lot of trendies." Melbourne, a banking center and the country's second largest city, is supposed to be staid, but in the '60s and '70s it had a counter-culture more active than Sydney's.

Monkey Grip, a moving first novel set in that time and scene, was published by a thriving feminist press there called McPhee, Gribble. The Helen Garner novel had a first run of only 3,000 copies -- subsidized by the Literature Board -- which sold out in two weeks. The book is now in its third Penguin Australia edition, has been published by Seaview in America, and is being filmed.

Garner, a whippet-slim woman in her thirties, who says she rides a bicycle daily "in order to keep my balance," writes like a lacier Doris Lessing. Garner, compares a feminist woman's weakness for romantic love with the drug addiction of her lover, treating a black topic with an airy style that seems artless.

I asked Garner why she is the only young woman writer in Australia with a successful novel. Sitting on the stone steps of a friend's house, she said she thought most talented women her age -- active in the women's movement of the late '60s -- were more interested in music and theater than in writing books.

Garner's publisher, Di Gribble, disagreed sharply. "Publishing here is dominated by men," she said. "A male publisher advised me that the worst possible thing to have on the list is a first novel by an unmarried woman."

Not long afterward a Sydney Morning Herald reviewer wrote, of another first novel by an unmarried woman. "I will, no doubt, be condemned for suggesting that this excellent, but to me somewhat intense novel, is a woman's book: but I must add by way of penace that it is very intelligent." XAVIER HERBERT BICYCLING to Redlynch, Queensland, in Australia's "Deep North" to see Xavier Herbert, at 80 the grand old man of Australian novelists, I rode past cane fields, skirted the mashed carcass of God knows what antipodean medium-sized marsupial mammal, and passed numerous crushed snakes, probably poisonous.

Herbert, fit and tan in khaki shorts and rubber thongs, had been described to me as both "a cantankerous old ear-basher" and "a gifted monologuist." After 4 1/2 hours of one-sided conversation under a banyan tree behind his cottage, I leaned toward the second opinion.

Like Keneally, he has a robust contempt for critics: "What stopped me from reading reviews is that for some people pissing on things bigger than themselves is compulsive, as for puppy dogs."

Herbert has had his say in a big manner. His 1934 novel, Capricornia , a best seller around the world, was 300,000 words long. His 1975 novel Poor Fellow My Country is, at 940,000 words, considerably longer than War and Peace . It was published in the United States by St. Martin's last winter.

"I regard the novel as a psychotic thing, an aberrant thing," Herbert sid. Typing Poor Fellow My Country on the Remington portable he bought in 1927, Herbert worked from 1 a.m. to 11 a.m., breaking to run six miles between fields of sugar cane, and then slept.

He jokes easily about the book -- "They say you can't put it down; the job is to pick it up" -- but says it is a cry for his country. Like Capricornia , it is a violent, gripping story of blacks and whites in northern Australia. "the aborigine," says Herbert, "is no better off than when I was a boy." In the '30s. Herbert was superintendent of aborigines for Darwin; during the war his offer to organize all-aboriging troops was declined.

Jeremy, Herbert's hero, says that it's the aborigines who belong in Australia, and that the famous Australian sardonic humor shows that Australians "are a bitter people, bitter for the want of a land to love."

Herbert, whose grandmother was a convict, was a pioneer in breaking away from imitating the mother country and making Australia the center of the world in Capricornia .

Australian culture could be said to lag roughly 150 years behind America's -- unlike America, the country never made a clean break with England. When in July 1775 Captain Cook sailed home from discovering Australia and New Zealand (reporting, "I have made no great discoveries"), George Washington was leading his troops in the siege of Boston in a country with a century and a half of healthy colonial culture.

While I was there, an Australian journalist defined his country as "a continent which has gone from penal colony of Britain to client state of America without drawing an independent breath." The aridity of the heart of the country, the brutality of the country's prison origins, as well as its humiliating dependence on England and America have spawned a sardonic cast of mind -- original at best, cynical at worst. (A common Australian way of expressing ecstacy is to say "It's better than a poke in the eye with a burnt stick.")

An American visitory has the unusual feeling there of being a representative of the Old World in a promising New World -- like an Englishman in 19th-century America at the time when Emerson was saying "Why should not Americans enjoy an original relation to the universe?"