Certainly an interesting question!
Firstly, whether the surgery is elective or non-elective is the issue here. Just because surgery is elective doesn't mean it isn't necessary in the eyes of the individual. Also, there are plenty of things that can be the subject of elective surgery today that will eventually become non-elective if left long enough! So I don't believe you have a right to say to an employee that they take sick leave just because their surgery is elective.
Just because it's "cosmetic surgery" doesn't necessarily mean it's for vanity (i.e a nose job or a face lift), it could be something less obvious but very personal that is impacting on their private life. Clearly it is important to them if they are risking going overseas to get it done.
As for validity of the medical certificate, this is also a tricky issue. This probably falls under State legislation and may vary between jurisdictions within Australia.
There have been cases in recent years where Australian courts have said that an employer cannot disregard or reject a medical certificate just because it is from overseas. That is not to say that an employer cannot reject a medical certificate when there is evidence that the medical certificate was not warranted. It seems from these cases that an employer is entitled to make enquiries of the issuer of the medical certificate to ascertain whether it is valid and/or whether they should accept it.
Here's a some reference material;
Page 4 of
this doc from lawyers Russell Kennedy
Have they said how long they are likely to be away for?
At the end of the day they only have a limited amount of sick leave and if it isn't going to inconvenience you to much as an employer maybe it would be better to let it go without a fuss. After all, they have been very up front about it. They could have just gone on holiday without saying anything, had the surgery done, then phoned in sick!
The usual disclaimers apply!