The NSW Government, just before Parliament rose for several months, passed a law to stop behaviour that "causes annoyance or inconvenience to participants in a World Youth Day event".
Police will have "discretionary" powers to arrest and/or fine people. While some, including Anna Katzmann, SC, President of the NSW Bar Association is reported as saying that the laws are "unnecessary and repugnant".
People in Australia do have a right to free speech and to protest, and a law that relies on non-specific, vague terms such as "annoyance" must be bad law. I suspect that many courts would struggle to define it. I could not find a general, stand-alone legal definition for it.
WYD is unpopular with some people. It will inconvenience many. But so do/did other cultural events: consider the Gay and Lesbian Mardi Gras, for which streets are closed, and which promotes lifestyles practised by about 10% of the community (http://www.uqu.uq.edu.au/queer/faq_gl#7) In the 2006 ABS YearBook, 34% of Australians identified themselves as Catholic. Some/many Sydney and NSW Catholics will attend some or all WYD events. They should not now be denied that opportunity.
I'm not attending WYD, but participants in WYD should be free to do so without torment or disruption. Those who wish to protest should do so away from those specific areas being used by WYD, and respect it as a (world, and local) community event that will happen just once in their city. That is, they should be tolerant, and inclusive, in the same way that they demand of others.
Issues surrounding whether or not Sydney, or any other metropolitan city, should host large events that cause disruption, and bad legislation from our governments, should be addressed by the community, by contacting your local politician. APEC springs to mind. Look them up at www.nsw.gov.au and www.aph.gov.au