my experience with PR only really started at around 2005, and even then I was already hearing cases of Singaporean friends having to take their IELTS to get their PR.
it's no big loss if you're doing it outside Australia, namely because there isn't a high demand for it. but I know that when I was looking to do mine, I had to look out of Victoria to get a test date, and the nearest one (in Tasmania) was three months away from when I wanted. this was probably due to the surge of interest when the government made it a requirement for the PR application, either that or there was always an increased amount of people taking it regardless.
to make matters worse, I was also told that without the IELTS test, DIAC (or DIMIA at that time) wouldn't even start looking at the application. apparently, what I was told was either wrong, scaremongering by the agent, or re-modelled into something else as evident by cosycactus' reply to me earlier. it was because of that that a few friends of mine only had their PR application under way a whole six to eight months later, simply because they couldn't get any slots for IELTS testing within Australia itself.