The state should compensate defendants for loss of wages if the state loses the case.
The police officer who brought the false charges should. That might make them think twice.
Police stopped getting costs awarded directly against them a long time ago. Now they basically get a "please explain" from their supervisors and if it's serious enough, perhaps some managerial action and a note on their personnel record. The organisation wears the actual costs if there are any. You also can't sue a Police officer personally in Australia if they are acting in execution of their duty, rather you sue the relevant Police service (an example would be, if you claim a Police officer assaulted you during an arrest or interaction).
Having prosecuted many matters in Australia, I don't agree that an individual officer should have costs awarded against him/her. In my experience, probably a good 80-90% of defendants before the court are truly guilty of breaking the law (whether the court comes to the same conclusion is an entirely different story). It's not uncommon for a matter to be dismissed, not because the defendant is completely innocent, but because Police prosecutors couldn't prove it either in accordance with the Evidence Act, investigating Police didn't do a thorough job, mental health reasons or even because the magistrate decides to go easy on the defendant and not record a conviction.
99% of the time, Police do good work. You have those that do the bare minimum and probably get up in court most of the time, you have those that go above and beyond to investigate matters thoroughly, then you get those few who are just slack, make assumptions and don't do the job even to a minimum standard.
Trust me, if you got to be a magistrate in a local court for a week, you'd be throwing the book at everyone.
I'll also add, front-line Police cop a lot of flack from management. Expectations of them are sometimes ridiculous, all in the name of statistics and figures rather than actual proper Police work. Those working on "the beat" are among the hardest workers and the lowest paid (not that the base pay is bad, but they aren't entitled to any special allowances like detectives and other specialised units are), there is no way I would do their job.