I recently returned to California after living in Australia for 20 years. I had a California drivers license before moving and currently hold a valid Australian license. What is the process I need to follow?
The generic guidance for obtaining a California driver's license is here, but in your case there are two uncertainties that complicate this. The first is that California will apparently begin to issue REAL ID compliant licenses after January 22, 2018, which may change the documentation requirements a bit (the page above doesn't reflect this since today is only January 3 and the DMV does nothing before it really has to). The second is that while a foreign license holder would normally expect to have to pass a road test (California only waives this for people with licenses from other US states), someone who previously held a California license may qualify as a "late renewal" and avoid a road test this way. What I don't know is the time limit for a late renewal, if any; I got one after 8 years out of California but the license expired only 3 years before my return.
Given this, what you need to do is more-or-less this:
Read the California Driver's Handbook. You'll be given a knowledge test no matter what, you can't get many questions wrong and California has some unusual laws they like to ask about.
Schedule an appointment at the DMV.
Drop by a DMV office, pick up a DL 44 license application and fill it in before your appointment. The forms are usually on tables somewhere in the office, you shouldn't need to queue up to get one.
Take proof of legal presence and your birthday (e.g. your passport) to the appointment.
Take your Social Security card to the appointment. The web page now says you just need your SS number, but after January 22 I believe you'll need the card itself.
Take two documents showing your name and California address (utility bills, bank statements, ...) to the appointment. The web page says you needn't if you previously had a CA license but I believe this may also change after January 22.
Mention to the first person who looks at your application that you previously held a CA license. They'll look for the record and figure out whether you can do a late renewal or not.
If you can do a late renewal you'll take an 18 question knowledge test and, if you pass, you'll walk out with a license. If you can't you'll take a 36 question knowledge test and, if you pass, you'll walk out with a learner's permit. In the latter case you'll need to schedule a road test and pass it to get a license. If you haven't waited too long you might be okay driving with your Australian license in the interim (but be very polite if you are stopped by police and show it).
You should try to get this done as soon as possible after you return to California. You can legally drive with the Australian license only 10 days after becoming a California resident, but since the exact date that "residence" happens is entirely fuzzy you'll be relying on the discretion of any police officer that stops you to avoid an unlicensed driving citation. Being able to say "I've only been here 3 weeks" is more likely to have a happy outcome than "I've been here 6 months".
According to Renewing Your License in California:
Expired Driver's License
You cannot renew your California driver license more than 60 days after it has expired.
You'll need to visit your local CA Department of Motor Vehicle office and complete a new Driver License or Identification Card Application (form DL 44).
Get the form at the CA DMV office, or have the form mailed to you by calling (800) 777-0133.