I read quite a lot about this when I was deciding what type of breast reconstruction I was going to have. Depending on the type and extent of the reduction/lift will determine how exactly the surgery is done. Helle is correct, they often excise around the nipple (in a lollipop shaped excision) and reattach it once they've trimmed the excess skin/tissue away. There is the risk of losing some or all of your nipple sensation, but it's not hugely common, although the nerves can sort of grow back to a certain extent over time.

My understanding is that if your breasts weigh over a certain amount and/or you are having flow on issues with your health (back & neck pain, skin infections, self esteem, anxiety etc) you can have it done through the public system (after a bit of waiting). Alternatively you could find a breast surgeon or plastic surgeon who specialises in this area, get a quote and work out how much your PHInsurance would pay. Get ready for it to be a really stingy amount (if they pay at all) as PHIs are typically a bunch of a**holes when it comes to paying for breast surgery, which they will insist is cosmetic. So start at your GP and get a referral right from the beginning that states the medical reasons why you need it done. This will help further down the track if you need to produce paperwork to make the PHI pay. Choose a surgeon you feel comfortable with, ask to see photos of their work, ask lots of questions. Good luck.

PS If you're a smoker, give up now. Smoking really compromises your ability to heal from this type of surgery.