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When sea levels were lower during the Pleistocene ice age, including the last glacial maximum about 18,000 BC, the lands formed a single, continuous landmass. During the past ten thousand years, rising sea levels overflowed the lowlands and separated the continent into today's low-lying arid to semi-arid mainland and the two mountainous islands of New Guinea and Tasmania.
Geologically, the continent extends to the edge of the continental shelf, so the now-separate lands can still be considered a continent. Due to the spread of flora and fauna across the single Pleistocene landmass the separate lands have a related biota.
New Zealand is not on the same continental shelf and so is not part of the continent of Australia but is part of the submerged continent Zealandia. Zealandia and Australia together are part of the wider region known as Oceania or Australasia.