Connection time: 1hr 25min I am arriving from AUH with etihad in to MEL and continuing on to BNE with VA.

Connection time: 1hr 25min

I am arriving from AUH with etihad in to MEL and continuing on to BNE with VA.

Arrival: 18:35 Departure: 20:00 (last flight to BNE for the evening)

Is this cutting it to close?

Should be plenty of time assuming the EY flight isn't delayed out of AUH.
Customs is really quiet at that time of day so you will have plenty of time to grab your bags and drop them upstairs at the VA domestic terminal. 

Should be doable. Will you have checked luggage on the domestic leg?

I recommend you OLCI before departure from AUH and print your VA boarding pass(es) for the MEL-BNE flight.

I will have to clear customs and recheck my bagged through so yes. 

I will be ticketed through I believe.  

Will this be on the same PNR?

Yes :)

Then you should be fine. In the worst case, they should be able to rebook you on the first morning flight out of MEL, VA 303, if things really do go out the window, but I think you should be alright.

Do you know what hotel they will use?

Nope. Just pray it's not the floor, as MEL is 24/7.

Easily done.Providing you don't get held up in customs.I seem to always be thoroughly checked by customs when i have a tight conx.