Hi,
VSB 14 from memory doesn't stipulate that an engine needs to be newer than the car. The engineer has told you this to make the emissions aspect easier. An engine that is the same year or newer than the car will ensure that any emissions requirements are met without issue. However, If you have any (and I mean any) modifications, this logic will be invalidated and an IM240 test can be asked for to meet compliance. The car will need to pass the Emissions targets set for its year of manufacture.
The IM240 Emissions test thresholds (HC, NOx and CO levels) for your car's year of manufacture can be found here:
https://www.infrastructure.gov.au/vehicles/environment/emission/files/Emission_Standards_for_Petrol_Cars.pdfSo its not exactly true that you need a newer engine than the car, the engineer was trying to make it easy for you and him/her. You can still get an IM 240 emissions test in Sydney NSW at the Botany testing centre. It takes about 30-40 mins. Not sure if Victoria is still doing them.
I agree with Bruce, almost everything has gone up in price recently and expecting a total front/back conversion with engineering to cost under $10K is not realistic. A solid, good condition, low km second hand LS3 engine, ECU and gearbox package will cost $15K alone. The whole car needs to be modified for this conversion to work. Its not a weekend job to do in your driveway. But again it all depends on the type of result you want... OEM levels of fit, finish and reliability or something less.
Overly modified cars (like a V8 MX5) tend not to do too well in the reliability stakes unless properly modified across all the subsystems of the conversion. You will be surprised at how many problems the engineer's solve at the OEM level to ensure your comfort and the cars reliability. When you modify a car in its entirety front to back, you need to solve all these problems again...yourself..and that costs time and money, plus a few cuts and bruises
Cheers,