The story
Compound of bunyip (“mythical Australian monster; impostor”) + aristocracy. Coined by Australian journalist and politician Daniel Deniehy in 1853 satirising a proposal of William Wentworth for a hereditary peerage in the then colony of New South Wales. At the time, bunyip was Sydney underworld slang for an impostor or con-man, a sense Deniehy may have been aware of, but which was “obviously” unknown to Wentworth.
Etymology from Wiktionary, CC BY-SA 4.0.