Earlier use of this argument for the necessity of evil?

The natural world is no more real than a dream, for it is not physical substance that makes reality, but your consciousness which turns it into experience. And therefore to say evil is nothing (not a substance) is of no consequence at all.

The issue is "why does God allow suffering to occur?" That is the question we are really asking when we ask "why did God create evil?", for what is evil if it never causes suffering?

And to this question God only tells Job to "trust Me", He gives no other answer.

One could argue that Augustine saw hints of this argument in Scripture:

I am the LORD, and there is no other,
    besides me there is no God;
    I equip you, though you do not know me,
that people may know, from the rising of the sun
    and from the west, that there is none besides me;
    I am the LORD, and there is no other.
I form light and create darkness,
    I make well-being and create calamity,
    I am the LORD, who does all these things.

—Isaiah 45:5-7 (ESV)

Isaiah says that God created both darkness and calamity, which seems to contradict (or at least, go beyond) Genesis 1 where God created light out of darkness and everything was good. Since Isaiah not only knew his Scripture, but was certainly referencing Genesis here, there must be some way to reconcile the apparent contradiction.

Augustine argues that evil is not a substance which God created:

What, after all, is anything we call evil except the privation of good? In animal bodies, for instance, sickness and wounds are nothing but the privation of health. When a cure is effected, the evils which were present (i.e., the sickness and the wounds) do not retreat and go elsewhere. Rather, they simply do not exist any more. For such evil is not a substance; the wound or the disease is a defect of the bodily substance which, as a substance, is good. Evil, then, is an accident, i.e., a privation of that good which is called health. Thus, whatever defects there are in a soul are privations of a natural good. When a cure takes place, they are not transferred elsewhere but, since they are no longer present in the state of health, they no longer exist at all.—Enchiridion, Chapter III., 11.

I don't think "accident" is the best translation (thought I don't know what the original Latin said nor could I translate it). It seems to me that the translator (Albert C. Outler) used the legal or philosophical definition of "accident": God caused evil, but is not responsible for it. Since evil is not its own substance, but rather the property of lacking some good, God's creation opened the door to evil.

To make sense of Augustine, we must recall that he was a Neo-Platonist by training. Plato and his followers believed that everything we see in the world around us is merely a reflection or shadow of some ideal Form that exists outside of the world. Augustine reapplied the concept to Christianity: God's plan of creation becomes the Form that the world must be conformed to. Any failure to conform to God's plan is evil: falling short of the Good.

Summary

Augustine used Neo-Platonist philosophy to resolve the logic problem of how God could be the creator of all things and yet not be responsible for evil in the world. He seems to be the first to put those two pieces together in just that way. (As far as I have found neither Philo nor Paul, Jews who were influenced by Plato, made this argument.)

Augustine, and other Christian leaders ignore scripture on this point. Isaiah 45:7 ("I form the light and create darkness; I make peace and create evil; I am the Lord that does all these things") and Deuteronomy 30:15-20 ("See, I have set before you this day life and good and death and evil . . . .therefore choose life that you may live, you and your seed; to love the Lord your God, to hearken to His voice, and to cleave unto Him; for that is your life and the length of your days. . . ."), both make it clear that good and evil were created by God. Moreover, the verses at Deuteronomy make it clear that the creation of evil went along with the gift of free will, without which we would be robots or hand puppets. Our task, Deuteronomy is telling us, is to "choose life" by knowing God through study, walking in His ways, following His commandments, and loving Him with full hearts.

The assumption that God only creates good, and not evil, does not come from the Hebrew Scriptures, but appears to demonstrate early influences to the Church by the dualistic views of Zoroastrianism and Manichaeism. The NT reflects this, too, by its exaggeration of the abilities and independence of Satan, in contrast to the Jewish view, as reflected in Job, for example (that Satan was a prosecutorial angel working at the direction of God).

The existence of both good and evil in the world are both essential to the concepts of free will, reward and punishment, and the spiritual and moral development of mankind. Therefore from God's perspective, the co-existence of good and evil in the world as options for Man serve a Divine purpose and therefore serve an ultimate good.

Augustine's position, really, is not from the Bible at all. Realize that Augustine was heavily influenced by Manichaeism. Manicheaeism was a Persian religion that, like Zoroastrianism and Gnosticism, had a dualistic cosmology where there were forces that were exclusiviely good opposed to forces that were exclusively evil. Widengren, Geo Mesopotamian elements in Manichaeism (King and Saviour II): Studies in Manichaean, Mandaean, and Syrian-gnostic religion, Lundequistska bokhandeln, 1946. Manichaeism was popular from the 3rd to 7th centuries in the Eastern Mediterranean area and was among Christianity's chief competitors. See Andrew Welburn, Mani, the Angel and the Column of Glory: An Anthology of Manichaean Texts (Edinburgh: Floris Books, 1998), p. 68. Augustine had been a Manichaean before converting to Christianity, his enthusiastic conversion coming shortly after Roman Emperor Theodosius I had issued a decree of death for any Manichaeians in 382 and shortly before he declared Christianity the empire's official religion. Some modern scholars have suggested that Manichaean ways of thinking influenced the development of some of Augustine's ideas, such as the nature of good and evil, the idea of hell, the separation of groups into elect, hearers, and sinners, and the hostility to the flesh and sexual activity. A. Adam, Das Fortwirken des Manichäismus bei Augustin. In: ZKG (69) 1958, S. 1–25 (cited in Wikipedia article on Manichaeism). As these views are contrary to views in the Hebrew Scriptures, it is more likely they were introduced by Augustine from Manichaeism. It could be argued that, like many Church innovations, these changes were made not only out of Augustine's personal beliefs, but to make Church doctrine more attractive in parts of the world where Zoroastrianism and Manichaeism held influence.

You are right that the idea of evil as the absence of good is traditionally associated with Augustine. As far as I understand your specific idea, you are positing that 'absence of good' is necessary for anything that is not God, or that nothing aside from God can be wholly good.

This reminds me, more than anything else, of the Gnostic world-view, wherein all created beings emerge as "emanations" from the Godhead, and are more and more corrupted as they get further out from the source, like light from a candle in a dark room. In particular, the material world is inevitably impure (but can be transcended through spiritual discipline, perhaps thanks to some spark of goodness from above that is embedded in each human soul). There are many nuances within Gnostic traditions, and a lot of mystical / esoteric stuff, but this is the broad thrust.

In relation to Christianity, there is a fascinating history of conflict - though as usual, we almost always get the orthodox perspective, which may not be entirely fair to what actually happened. The problems early Christians encountered with Gnosticism include:

• Inherent sinfulness of the world, perhaps created by Satan / the Demiurge versus God's love for the world - he created it, nurtures it, and considers it good.
• Unimportance of moral behavior in the physical realm versus Obligation to behave correctly and do good works
• God as pure inaccessible Spirit versus Christ incarnate as a man (living, suffering, dying)
• Esoteric practice (levels of initiation into mystical secrets) versus Exoteric (proclaim the gospel to all)

Ultimately, the difference in Christology was the key marker of Gnosticism as heretical. The Gnostic version of Christianity held to docetism whereby the incarnation was an illusion, the true Christ being only spirit. This belief is contrary to certain passages in Scripture which we believe to have been explicitly written against Gnostics (e.g. 1 John 4:2), and it was definitively rejected at the first ecumenical councils.