The hosts tumbled towards a fifth straight Test loss during a collapse of 8-32 in 19.2 overs, with Kyle Abbott snaring six wickets and Kagiso Rabada striking four times in the stunning session.
It was the latest of many woeful batting performances in recent years that has left coach Darren Lehmann, selectors and Cricket Australia boss James Sutherland under immense pressure.
Selectors are expected to settle on a squad for the third Test later this week but changes are fully expected, with Adam Voges likely to be dropped.
Smith dug in, taking 40 minutes to score his first runs on day four, but would have been struck with a sense of deja vu as he watched Australia slip from 2-129 to 7-150.
The skipper was eventually caught behind on 31. Rain offered more resistance than Australia's batsmen, with the entire second day abandoned without a ball being bowled. Smith had finished 48 not out on day one, when Australia posted a paltry total of 85 after being sent in by Faf du Plessis.
It was the nation's lowest Test total on home soil since 1984.