There are lot bigger races where the horse has to be 4 years and up
I can't say about Australia, but in the US, and also in the UK according to my British mates, there isn't anything bigger (with respect to the combination of money, prestige, recognition, publicity) than the Triple Crown of Thoroughbred Racing (although my mates in the UK say that the Grand National is as big as any single event).
US: Kentucky Derby, Preakness Stakes, Belmont Stakes
UK: 2,000 Geineas Stakes, Epsom Derby, St Leger Stakes
You might have bigger and more well know TB races for older horses in Australia, but in the US the Triple Crown is it. There obviously are races for older horses, but they are far less known or presigous. Now there are some great races, like the Tevis Cup, but it's a different king of racing and restricted to 60 month old horses and above. If you're not familiar with the Tevis Cup. 100 miles in one day across a variety of terrain. Some of it pretty rough.
As for training to race at such a young age. You can spin it any way you want. The history of racing 3 year olds that have been trained for racing during their developing years speaks for itself. Outside of Throroughbred racing the percentage of Thoroughbreds breaking down is a small fraction of those who break down in the racing industry. You have no choice but to train them hard at 2 if you want them to have the strength, endurance and speed to win at 3. And if they never win, you never get a return on the investment, so the money spent is lost. So, you while you will do what you can to keep them from breaking down in training, you still have to train hard on those young, developing joints in order to have a chance at winning. No wins = no money = lost investment. Won't be able to stay in the business long that way. Most people with money aren't to keen on the idea of always throwing it away on horses that don't win, so some horse is going to need to win, which takes us back to the need to train hard during the years before they race. There really is no way around it for 3 year old racing.