Opening batswoman Beth Mooney slammed a 40-ball 50 to help Australia.
However, Australia kept losing wickets and never managed to get a move on.
Rachael Haynes (24) contributed to the score.
For England, Sophie Ecclestone (2/19) and Sarah Glenn (2/18) were top notch with the ball.
England fail to chase down the target
Australia had to bowl tight and not allow England any room. They achieved the same with a major discipline on offer.
England lost far too many wickets with nobody taking responsibility.
Katherine Brunt (23*) and Lauren Winfield (23) made some decent contributions.
However, they fell short by 16 runs.
For Australia, Sophie Molineux (3/19) was terrific with the ball.
Notable records scripted in this match
Mooney slammed her fifth career T20I fifty and raced to 1,122 runs in 45 matches.
Haynes surpassed Britney Cooper (567) in terms of career T20I runs (571).
Megan Schutt (1/19) raced to 75 career T20I scalps and equaled former England bowler Jenny Gunn with this process.
England's Katherine Brunt now has 81 career T20I scalps.
Final to serve as extra motivation for Australia and India
With the ICC Women's T20 World Cup to start this month, the final will serve as extra motivation for both Australia and India. India did really well on Saturday to pull off a stunning chase, however, Aussies will want to hit back and do well.