There is absolutely no need to spend anywhere near that kind of money unless you are concerned about buying everything new & everything with a flashy brand.

We've done it for around $1000.

Buy at stores like Target, Kmart & Big W & you will save heaps. Aldi also has baby things from time to time so watch out for their catalogues, they are by far the cheapest for nappies. Don't buy anything unless it's on sale. The chain stores have heaps of big baby sales with huge discounts.

Accept everything you get offered that's second hand & free. If you decide you don't want it you can pass it on to one of the grandparents to use. That's what we did. I was anti second hand clothes at first but then realised that most of them either hadn't been used or had been used once or twice and were like new - babies just grow so quick.

Cot - $189 - 50% off at Target.
Cot & cradle sheets & blankets $50.
Mattress - haven't bought yet but will be under $100.
Cradle - gift but was on sale at Target for $99 - one of those nice frilly ones 50% off again.
Change table/drawers/bath - second hand gift.
Clothes for bub $100 - body suits and singlets only as we got heaps of gifts.
Maternity clothes:
Big W mat jeans - $30
Kmart mat jeans $39
Big W mat tops 2 x $16 & 1 x $20
K Mart stetchy non mat tops 2 x $15 & one mat top $25
Mat bras from Big W $60 (3) & one from KMart $20.
The rest of my wardrobe fit through most of my pregnancy.
Pram - $80 at Kmart - Mothers choice shopping stroller - 50% off sale. Made by IGC who are experts in prams & car seats.
High chair - 2nd hand free.
Capsule - $100 from Big W when on sale - Zuzu - made by IGC who make most of the capsules available in Australia - perfectly safe but without all the bells and whistles. It was the only 100% Australian made capsule on the market when we bought it. These are available at Big W right now for around $120 - I saw them yesterday. We only had to add a thing to cushion bubs head when he was a newborn & it cost $20.
Sleeping bags - 1 x $10 1 x $3 (second hand like new).
Bottles & dummies etc under $100.
Fisher price rainforest bouncer thing $50 second hand (around $180 new).
Nappy bag $30 from Kmart.
Bottle bag $10 from Kmart.

Remember that you will get heaps of clothing, wraps, toys, bibs & blankets as gifts so you only need to have enough for hospital. My mother & MIL were constantly giving us gifts throughout the pregnancy so to be honest we wouldn't have even needed to buy any baby clothing.