South Australian anaesthetist Richard Harris and West Australian retired vet Craig Challen were given the award for their role in the daring rescue of 12 young boys and their coach from a flooded cave in Thailand.

Dr Harris said anyone with a measure of enthusiasm could achieve the sort of things they had, encouraging parents to let children find their "inner explorer".

"I can't bear to see kids squander any of these opportunities, trapped indoors, eyes glued to a screen," he told the ceremony.

"Outdoor activities really do promote physical and mental wellbeing and it's critical that kids can test their own limits."

Mr Challen said their story showed what could be achieved when people embraced opportunities.

"Confronting the small challenges that appear every day and taking responsibility for your actions and for their consequences is the only way you can possibly be ready for the life-defining events," he said.

Veteran paediatrician and children's rights advocate Sue Packer was named the Senior Australian of the Year.

She made a powerful speech, urging leaders and parents to do more to improve the lives of Australian children.

"By the current measures, our Australian children are not doing as well as they could," she said.

"If we want to improve, we adults are the ones who need to change. No more belated apologies.

"We need to notice children, be curious about their lives, whether it's our own children, children in the neighbourhood or the children on Nauru.

Indigenous rapper Baker Boy was crowned Young Australian of the Year, while the parents of Dolly Everett, who died by suicide after being bullied, won the Local Hero award.

Kate and Tick Everett were honoured for their work with Dolly's Dream, the foundation they founded to raise awareness about the potentially devastating effects of cyberbullying.

Australian Associated Press