It shouldn't pass roadworthy, but it is just possible that it looks worse than it is, and is just surface rust lifting the paint. If this is the case, some vigorous application of a wire brush and a scraper followed by trying to poke some holes with a screwdriver to show that is all it is, and touch up the paint.
On the other hand, if you can actually poke holes in it, as is quite likely, it will have to be repaired. From the picture, the rust seems to be mainly the chassis itself, not the spring hanger. The whole chassis should be carefully checked, as rust in other places is likely if it is in one location. (probably in places that are harder to see!)
The cost will depend entirely on how bad it is found to be, and will be mostly labour. I am not up to date with the Melbourne area, so I can't make any suggestions.
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