The Australian front-of-pack labelling system, Health Star Rating (HSR), does not include whole grain (WG) in its algorithm, but uses dietary fibre (DF), despite Dietary Guidelines recommending WG over refined grain (RG) foods. This study aimed to determine how effectively HSR differentiates WG and RG foods. Product label data were collected 2017–18 from bread, rice, pasta, noodles, flour and breakfast cereals (n = 1127). Products not displaying HSR, DF per 100 g, and %WG ingredients were excluded, leaving a sample of 441 products; 68% were WG (≥8 g/manufacturer serving). There was a significant difference (p < 0.001) in HSR between WG bread and breakfast cereal over RG varieties, yet the mean difference in stars depicted on the pack was only 0.4 for bread and 0.7 for breakfast cereal. There was no difference for rice (p = 0.131) or flour (p = 0.376). Median HSR also poorly differentiated WG. More WG foods scored 4–5 stars compared to RG, yet there was notable overlap between 3.5–5 stars. DF content between RG and WG subcategories was significantly different, however wide variation and overlap in DF highlights that this may not be a sufficient proxy measure, raising concerns that the HSR algorithm may not adequately communicate the benefits for consumers of swapping to WG foods.