Why Australians Say "I'll Kick Your Arse" Instead Of "I'll Kick Your Ass"

Piers explains all why in Crikey :

For me it’s all about the ‘r’. It leaps off the page with a meaty trill, evoking at once the hairy bum of a commando-kilted highlander and the war cry of a Cornish pirate. By contrast, ‘ass’ packs virtually no punch. To my mind it bleats in a plaintive falsetto, conjuring nothing more than a pair of sculpted ’tocks in spandex hot pants, waiting to be drop-kicked by a muddy boot.

The issue is probably more about spelling than language and I would wager that it’s a uniquely Australian dilemma. I very much doubt that ‘ass’ will be introduced into Britain any more than Americans are likely to adopt ‘arse’. Why? Linguistic jingoism aside, perhaps it has something to do with pronunciation. To the extent that written English words have at least some relationship to the way they sound, an Australian English ‘ass’ will probably sound pretty close to an Australian English ‘arse’. This is because Australians typically don’t make use of the so-called post-vocalic (or after-vowel) ‘r’, which means that for us the words ‘balmy’ and ‘barmy’ are pronounced identically. Contrast this with an American pronouncing ‘car’ as ‘carrgh’ (known as the rhotic ‘r’) or a Scot rolling the ‘r’ in ‘person’ (known as a trill or tap, depending on its length).

Kelly Gets Into The (Historical & Cultural) Detail Here