It certainly sounds like a case of lyctid borer, aka 'powder post beetle'. This insect produces very fine dust, similar to talc powder or flour, and leaves exit holes of 1.5 to 4.5 mm. It only attacks the sapwood of certain hardwoods. State legislation in Queensland and NSW controlling the sale of timber containing susceptible sapwood has been repealed, but the relevant Australian Standard deals with sapwood in milled hardwood products such as flooring as follows:
AS 2796.1 Clause 2.4 SAPWOOD SUSCEPTIBLE TO LYCTID BORERS
Sapwood susceptible to Lyctid borers shall be immunised against such attack in accordance with AS 1604.
If lyctid borer attack is confirmed, then clearly the flooring in question was not immunised as required by Australian Standard 2796.1, Timber - Hardwood - Sawn and milled products, Part 1: Product specification. If you are unsure whether it's a case of lyctid borer, or your situation does not fit the criteria for lyctid attack, you may need an inspection by a qualified person.
Lyctid borerAnswered on 09-12-2020
Please note that our answer is based on the best advice available at the time. If the National Construction Code, Australian Standards or local requirements have been subsequently amended, our answer may no longer be correct in all details. For more information, please read our disclaimer.