This is actually quite an exciting development. SPG points can be transferred to the VX Elevate program at 1:1 (and you even get the 5,000 bonus points for every 20K transferred). But Elevate redemptions on Virgin Australia require very few miles!
A round-trip on a VA flights between 0 and 600 miles costs 6,000 Elevate points in economy or 10,000 points in business. On medium-length flights (600-1,200 miles) it's 17,000 points in Business. On long flights (e.g. Sydney-Perth) it's 27,000 points in Business return.
That's less than half of what VA charge for its own redemptions through Velocity!
I can see some very good value here if you have SPG points, or can accrue some by purchasing them or transferring from Amex MR.
Edit: So I just had a proper look into this. SPG currently have 25% off mile purchases of at least 20,000 Starpoints. So, if I was to buy 22,000, it would cost US$577.50 (AUD748). If I was to then convert these points to Virgin America Elevate points I would get 27,000 points (including the 5,000 bonus points for transferring 20,000 points).
I could then redeem those 27,000 points for a return Virgin Australia
Business class flight from the east coat to Perth. The taxes would be US$52 (AUD67).
For example:
Total cost: AU$815. (Compared to ~$4,000 full-price)