The reason was that HIV could be transmitted through blood. That, and an unhealthy dose of homophobia.
The federal government today has finally changed the rules - a little. You can be a gay man, and donate blood, provided that you have not had sex with another man in the last 5 years.
So a subset of gay men, those who have been celibate for 5 years, can now donate blood.
The federal government says it is "working on" guidelines which would shorten the period from 5 years to the 1 year Australia and Great Britain prescribe, or the 6 months required in South Africa.