Listen to your wife on this. Suggest another time. She's massively stressed out about her father, I imagine, and dealing with this family situation while at the same time preparing for a visit from Australian in-laws is too much stress.
Of course you don't shut down and go into an indefinite period of pre-mourning, but if her father is on death's door let this run its course and explain to your parents that its best to put off the visit for a while. (One compromise might be for you and your son to visit them in Oz if your father in-law's situation becomes stable).
Your wife is right in that its generally bad form to plan holidays while a parent is gravely ill. Even if you think there is no burden on her, and that your own parents are self-sufficient, this kind of situation is a massive stress sandwich for Japanese people. If (God forbid) her father dies, the whole process of funeral and cremation, and then post funeral Buddhist rites which drag on forever depending how devote her family is (and usually, depending on how devote they wish to appear) are too much for many people to bear. Usually best to avoid planning anything until after the 49th Day Ceremony.
I'm assuming she's traditionally/nominally Buddhist. If you don't know about all these ceremonies (7th day, 49th day, 100th day, etc..) best to brush up on them, and talk about them with your wife. Your wife's family may wish to simplify things and forgo some of the rituals. If her father was a man of some standing in the community, it will be hard to cut back on these, as a certain level of ceremony will be expected.
It's a delicate time, so give her some space to deal with this without having to deal with her Aussie in-laws. Hopefully your parents will understand. Give it a few months to settle down.