Does this mean a pilot Certificate holder who also holds a Part 61 Licence could have his/her Pilot Certificate suspended if the Part 61 Licence medical was changed or declined in anyway?
Fortunately, no it does not. Search the thing for the word "medical" and you will see it is not there. This is about licences held and cancelled (by CASA), it has nothing to do with medical certificates being declined. Suggest a read of the explanatory statement F2019L01204ES that is with it (7 pages of legal mumbo jumbo). CASA Instruments are written to permit, or to prevent, something which is not covered in the normal regulations.
Background
CASA has become aware of situations in which, after CASA has cancelled under regulation 269 of CAR a flight crew licence held by a person, the person applies to a sport aviation body for the grant of a pilot certificate, which would enable the person to continue to fly the same aircraft the person was flying under the licence. If the person can continue to exercise flying privileges, albeit under the auspices of the sport aviation body, this would in effect circumvent the regulatory action taken by CASA against the person. The directions, issued under the instrument, address this anomaly and other analogous situations.