Basicaly, you're asking if that で is the particle で or the suspensive/て form of だ. The thing is, those two often have very similar meaning.
If we think it's the particle で, it means that the summer is the direct cause of the heat :
It's very hot in Australia right now because it's summer.
If we think it's the て form of だ, we just state two facts but with the idea that there is a causal link between them.
It's summer in Australia right now and (that's why) it's very hot.
Long story short : It means the same thing.
Now, I don't know exactly what you meant when you wrote "Australia is now very hot in summer." : if the implied idea was that the summers have been hot in Australia for some years but that it hasn't always been the case, then I think the proper japanese sentence would be :
Nowadays, Australia is very hot in summer/Australia's summers are very hot.
では indicates that there is a contrast between now and before, and I don't think で can replace の時 there but I can't really explain why.