My sugar daddy wants me to pay a $50 conversion fee on paypal

Yes, this is a scam. Browse other questions tagged sugar-daddy on this site for many many more in a similar vein. Block him and move on.

You can also read the community wiki entry about it:

The typical premise of a "sugar" relationship is that a sugar-daddy or sugar-momma pays a sugar-baby in exchange for companionship, traditionally sexual in nature. A sugar relationship is often used as a setup for more ordinary fraud by enticing the sugar-baby as the victim.

The idea of a "sugar daddy" or "sugar mommy" is that they give you money usually for sexual favours. Nothing particularly wrong with this in my view (others may disagree).

Never, ever in a million years will a real "sugar daddy" ask you to pay any money. So yes, this is a scam. And you haven't met any "sugar daddy" yet. Just because I'm curious, when you're successful eventually, could you post how many scammers you had to go through before you found a real one?

PS. If I wanted to pay you say US$1000 that need to be converted to AU$, and I didn't want to pay any exchange fees, I would just send you US$1000, PayPal or whoever else would take their fee out, and you would get US$950 converted to AU$. It wouldn't make any sense at all to send you $1050 and then you send $50 back.