EU261 is a quasi insurance/enforcement of contract. Without the need to go to court.
In the OP’s case this is a cancellation way in advance. As others have said there might be options to get to KI another way, or fly the day after (losing one night’s accommodation only).
If this had been bought as a package of course it would have been fully covered.
Actually all "way in advance", i.e. more than two weeks means in relation to EU261 is there is no mandated compensation.
If Qantas in this instance had to comply with EU261 then the following would be applicable:
Article 5
Cancellation
1. In case of cancellation of a flight, the passengers concerned shall:
(a) be offered assistance by the operating air carrier in accordance with Article 8; and
(b) be offered assistance by the operating air carrier in accordance with Article 9(1)(a) and 9(2), as well as, in event of re-routing when the reasonably expected time of departure of the new flight is at least the day after the departure as it was planned for the cancelled flight, the assistance specified in Article 9(1)(b) and 9(1)(c); and
...
2. When passengers are informed of the cancellation, an explanation shall be given concerning possible alternative transport.
3. ...
4. The burden of proof concerning the questions as to whether and when the passenger has been informed of the cancellation of the flight shall rest with the operating air carrier.
Article 8
Right to reimbursement or re-routing
1. Where reference is made to this Article, passengers shall be offered the choice between:
(a) - reimbursement within seven days, by the means provided for in Article 7(3), of the full cost of the ticket at the price at which it was bought, for the part or parts of the journey not made, and for the part or parts already made if the flight is no longer serving any purpose in relation to the passenger's original travel plan, together with, when relevant,
- a return flight to the first point of departure, at the earliest opportunity;
(b) re-routing, under comparable transport conditions, to their final destination at the earliest opportunity; or
(c) re-routing, under comparable transport conditions, to their final destination at a later date at the passenger's convenience, subject to availability of seats.
2. Paragraph 1(a) shall also apply to passengers whose flights form part of a package, except for the right to reimbursement where such right arises under Directive 90/314/EEC.
3. When, in the case where a town, city or region is served by several airports, an operating air carrier offers a passenger a flight to an airport alternative to that for which the booking was made, the operating air carrier shall bear the cost of transferring the passenger from that alternative airport either to that for which the booking was made, or to another close-by destination agreed with the passenger.
Article 9
Right to care
1. Where reference is made to this Article, passengers shall be offered free of charge:
(a) meals and refreshments in a reasonable relation to the waiting time;
(b) hotel accommodation in cases
- where a stay of one or more nights becomes necessary, or
- where a stay additional to that intended by the passenger becomes necessary;
(c) transport between the airport and place of accommodation (hotel or other).
2. In addition, passengers shall be offered free of charge two telephone calls, telex or fax messages, or e-mails.
3. In applying this Article, the operating air carrier shall pay particular attention to the needs of persons with reduced mobility and any persons accompanying them, as well as to the needs of unaccompanied children.