If we don't apply for permanant residency, does this mean we are temporary residents?

I'm assuming you are a Kiwi? The answer to your question is yes and no. New Zealanders on the SCV have more opportunities and rights than other people on temporary visas. However, Kiwis can't access social welfare payments or vote. And of course there's no real guarantee that the Australian government won't just change the rules one day and make it a lot more difficult for New Zealanders with no permanent residence status. That seems unlikely in the near future though.