Orange caterpillar parasite wasp - Netelia producta

http://www.brisbaneinsects.com/brisbane_parawasps/OrangeCaterpillarParasite.htm
When attacking its host, the female wasp temporarily paralyses the caterpillar by stinging it. After the host paralysed, the wasp lay a brown egg onto the skin near the head of the caterpillar. These eggs can be seen if carefully visual check the caterpillars..

The wasp larva hatches from the egg and develops externally, hanging on the head of the caterpillar. The wasp larva will not complete its larval development until the caterpillar has tunneled into the soil and formed its pupation chamber. After the host forms its chamber, the wasp larva will feed and kill the host, spin a black furry cocoon within this chamber.
Info from Brisbane insect website