Electronic cigarettes are legal to possess if they do not contain liquid nicotine.  The link below to NSW Health Fact Sheet provides detailed information;

Are electronic cigarettes legal in NSW?

The use of electronic cigarettes in public places

The use of electronic cigarettes, whether they contain nicotine or not, is not against the law under the Smoke-free Environment Act 2000 (NSW). This means it is not against this law to use them in indoor and outdoor public places where it is against the law to smoke. This does not prevent individual establishments and workplaces from developing their own policies to ban patrons and staff using electronic cigarettes on their premises.

The Smoke-free Environment Act 2000 bans smoking in enclosed public places and certain outdoor public areas.  The two main Acts and related regulations concerning smoke-free laws in NSW are identified below. The Smoke-free Environment Act 2000, Smoke-free Environment Amendment Regulation 2009 and the Smoke-free Environment Regulation 2007 ban and regulate smoking in enclosed public places. NSW Health provides guidance on what  a ‘smoke-free enclosed public place’ is for the purposes of the Act.

• Within 10 metres of children’s play equipment in outdoor public places;
• Public swimming pools;
• Spectator areas at sports grounds or other recreational areas used for organised sporting events;
• Public transport stops and platforms; including ferry wharves and taxi ranks;
• Within 4 metres of a pedestrian access point to a public building;

• From 6 July 2015, in commercial outdoor dining areas.

• they are often visited by children and families and they can be crowded
• they allow limited opportunity for people to avoid second hand smoke
• this approach will achieve an important reduction in many people’s exposure to second hand smoke
• this approach will create a more supportive environment for those who have quit.