Look at this graph: http://www.sagse.org.au/news/the-status-of-german-language-education-in-victoria
It makes sense though that German would be in decline and Asian languages would go the opposite way. The complexion of our community has changed enormously since the end of the white Australia policy, so it's no surprise that, as a society, we are increasingly casting our gaze towards Asia instead of Europe. Personally, I think whatever language you learn, it's beneficial and I don't really buy into the idea that some languages are better to study than others; however, with changing demographics you're going to see a change in the languages taught at schools

(also probably helps that the Aus govt. has been incentivising Asian language study)
To go to your original point though, I think LOTEs are tricky subjects, because those with a background in that language are at an obvious advantage. How then, do we deal with that? Well, in Chinese we now have three streams. One for native speakers, one for people with Chinese heritage and another for everyone else. But that's only feasible for large cohorts and, really, is beset with its own problems anyway (e.g. what about people with Chinese heritage who've never learned to speak at home?).
A French person, or indeed a German, studying either one of these languages would obviously be at an enormous advantage, mainly because the cohort of learners is dominated by non-native speakers. Therefore, they're almost certain to score really well because one's score is effectively a comparison to the others in the cohort. The reality is that there's probably little we can do here. And really, they represent such a small group that it hardly affects everyone else's scores.
There are some smaller cohorts though where this is a huge problem. Spanish is an interesting example. Most students who take it in VCE do so because they speak it at home; however, there is a small group of students who don't, who still take the subject. These people could be enormously talented learners, but they're probably never likely to do particularly well in Spanish, because their score is contingent upon how they shape up against native speakers. This probably makes an unfair assumption though, as it assumes that native speakers will always do well. I've taught Spanish, and have taught native speakers—whose Spanish was much, much, much better than mine—but who could not write. They would have, very likely, been outperformed by the non-natives, simply because they couldn't write.
Really tricky area!