Good questions! That's a good size plant, you could go to a 7 inch pot from there unless you want to divide it up. I wouldn't worry about a 6 inch pot as it doesn't give you much room to move.
The bulbs usually shrivel when they don't get enough water. That can be caused by not enough watering or by the roots rotting (possibly by the mix breaking down or overwatering).
When you repot make sure you clean the roots really well and make sure they're healthy. If any roots are dead you will need to remove them. If everything looks ok with the plant it should be fine to move them into the 7 inch pot I would think.
Where in Australia are you? Is there a local club where someone could have a closer look for you, they may also be able to help with local growing advice.
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