Watering hole in sweltering Australian city (6)
I believe the answer is:
hobart
'australian city' is the definition.
(I've seen this before)
'watering hole in sweltering' is the wordplay.
'watering hole' becomes 'bar' (I've seen this before).
'in' means one lot of letters goes inside another.
'sweltering' becomes 'hot' ('hot' can be similar in meaning to 'sweltering').
'bar' put within 'hot' is 'HOBART'.
(Other definitions for hobart that I've seen before include "Commonwealth port" , "Capital city of 10 across" , "Tasmania's capital" , "Port of Tasmania" , "Tasmanian capital" .)