Etymology of "chat potato"
Solution 1:
The following two sources suggest a possible origin or connection with the term “chit”:
Chat, — small potatoes are so named : — perhaps chits
(A new dictionary of the English language by Charles Richardson)
Chat - A small potato, such as is given to swine.
Etymology:
Compare chit (“small piece of paper”), and chad.
(William Safire, The Right Word in the Right Place at the Right Time, p. 43, Simon and Schuster, 2007)
Solution 2:
As India is not far away from Australia there is a chance that Chaat is the root.