The problems started in that era really, imo, or very shortly after. CA devalued the Shield at around that point.What I would like to know is how did Australian cricket find itself in a position from the 90's when there was such a wealth of great players waiting the wings, to now where there is basically nothing but unimpressive options?
Even during Ponting's captaincy there were concerns about players getting into the Test squad without the (then normal and expected) technical and mental background. Playing loose and unable or unwilling to dig in for the tough periods. Players were getting to the squad about as prepared as prior generations had been as rookies in Shield squads.
The focus on getting players into Australian setups, rather than winning the Shield, by the states has resulted in pushing youth into the Shield rather than picking the top available players. This in turn, decreases the quality of the Shield yet again - after the rarity of seeing Test players playing Shield cricket. And sometimes sees those players promoted ahead of being ready, fail, discarded in favour of the next flavour of the month who fails ..... getting dropped, working on your game, trying to come back stronger, maybe multiple times, is no longer part of the process.
At Shield, but not Test, level some eye on project players is fine but the teams need to mostly be strongest available. The worry is that even with a weakened Shield, there are no real standouts who can stay consistent over a couple of seasons. Or they get pulled out of the Shield and put into white ball teams (the calendar is really very wrong from a cricket perspective, but impossible to change much from a financial perspective, and CA has to compete with much wealthier boards).
The seeds were planted before T20 took over, which will just make things worse as that is now the focus of CA and some states. Some of those changes are quite recent.
And the huge pay on offer of sports with basically no international component, Rugby League and Australian Football, make it that much more difficult for cricket to draw the first preference of multi-talented sportspeople. If you aren't one of the chosen ones, you're far more likely to be able earn 200k+ among the 800 or so male AFL listed players than 100k in the 90 or so male professional cricketers. One reason why T20 is such a focus, I guess.