Island off Australia has useless leaders (4)
I believe the answer is:
oahu
'island' is the definition.
(island in Hawaii)
'off australia has useless leaders' is the wordplay.
'leaders' suggests taking the first letters.
The initial letters of 'off australia has useless' is 'OAHU'.
(Other definitions for oahu that I've seen before include "Chief island of Hawaii" , "Hawaiian island" , "Honolulu's island" , "Pacific island" , "popular Pacific location" .)