That's nothing, a couple of years ago some idiot Child Benefit civil servant managed to lose a couple of disks in the post which contained the personal details of around 25 million people. Details inculding, names, addresses, national insurance numbers and bank details. The data was not encrypted although if I recall correctly the disks were password protected.
http://news.bbc.co.uk/1/hi/uk_politics/7103566.stm
http://www.telegraph.co.uk/news/majornews/2191680/Child-benefit-data-loss-timeline-of-scandal.html
That was the worst of a long, long line of governmental balls-ups; my personal favourite been the time when it was found that five illegal immigrants were working as cleaners at the the Immigration and Nationality Directorate. Priceless :)
http://www.dailymail.co.uk/news/article-386865/Illegal-migrants-working-Home-Office.html
http://news.bbc.co.uk/1/hi/uk_politics/4999610.stm

Aliasalpha, What do you mean by "top marks in network security"? Classes, or do you also have experience in the field? Also are you willing to relocate and possibly move to another country? Finally do you have any "professional/career" IT experience yet?
Can't say I know much about your past, but your one sentence about having the knowledge but being unable to find the position sounds a lot like what I went through in the past. Was thinking that perhaps I might be able to offer some advice.

Yeah I mean classes, I topped the class last year and now I'm going to be marking this years class. The problems I have are threefold, first I live in a fairly large town but its not too high tech so IT jobs are scarce, secondly its a 'jobs for the boys' town where nepotism is more important than qualifications and thirdly I have no job experience so noone will employ me to give me job experience.
Relocation isn't an idea I'm too fond of but I'm starting to consider it

I'm starting to lose all trust in my government. After some of these posts, I think we are all fucked. Except Australia. Ya'll are safe from our idiosyncrasy.

Well government transparency is a wonderful thing but there has to be limits, I think a major police database without a root password is probably where that limit is

Ahh the good old boy problem... yea I ran into that as well that year I was in Texas, US. Mainly due to my age and flamboyance (They didn't like the head of of their CERT team (yea yea I realize it's redundant, kinda like PIN Number) having purple highlights in his hair).
As for your situation, it sounds like you're still in some sort of schooling? If so I'd look into getting any sort of retail job that involves computers or electronics. Not sure what the Australian equivalent is, but even something like Best Buy's Geek Squad or a small computer store would be good.
What this does is puts you in the work force, and as it's always said, it's easier to find a job you want when you already have a job. Also when you're in the interview and asked why you were working at such a low job compared to your qualifications it's simple to say "Well I was taking classes still and I need a job, any job while I looked for 'this one'".
Employers tend to shy away from candidates with large gaps in their work history.
Additionally I'd recommend learning all you can about the Cisco IOS. It's a great place to start and most places will expect any sort of network security professional to know networking and cisco systems inside and out... after that pick a single product line and start focusing on that. You can either pickup the books at your local library, used copies online, or even ebooks and PDF's (Legal or illegal. Yes I'm saying pirate the books to get into the field, because I guarantee you they'll get your money after you're working in the field (you don't want to know how many shelves of technical books I've purchased once I started working in the field)). Don't expect your classes to cover what you'll need to learn.
Finally... be willing to get out of that town. Accept an offer to relocate from a company. It sounds like that city is not a good place for you. And, that's something I understand all too well.
There you go, a bit of advice from someone that was once in that situation. Take it or leave it. If there's anything else I can help with let me know. :)

Texas. Best state in the country. =)

Hehe interesting you mention the Cisco stuff, my degree is actually in network engineering and I've got 3/4 of the CCNA finished. 4 isn't needed for the degree and I've got no intention of doing it at my uni till they get teachers who either care if their students learn or who can actually communicate in english.
God I miss my old networking lecturer, a cute, robbie williams obsessed, half blind austrian who was completely mad, great fun and seemed to fancy me. On top of that she was a fantastic teacher

That's one of the most annoying things about being unemployed, isn't it? Seeing the massive incompetence of the employed.
That and the fact that employers are always so keen to stress that you're over-educated, over-experienced... then they wonder why the ignoramuses they do employ fuck up like that.

Eh, state / government tech jobs are shit anyway. Steer clear.