So in Melbourne I had a worm farm... which is a multi-leveled plastic box that you put the compost into the top, and take the good dirt out of the bottom. It was pretty cool, it didn't attract any flies but it did stink pretty bad. It was going well until we had a couple of 40 degree days (like 115) and my little guys cooked... so it definitely needs to be a super shady spot.
Big compost bins will attract flies and critters, so you really do want it as far from your house as possible.