In 2021, Australia, the United States, and the United Kingdom announced cooperation on offensive nuclear powered submarines (SSNs) through the AUKUS security partnership, and concluded a binding agreement in 2023. Australia is to replace the conventional Collins class submarines with three to five Virginia class SSNs by the mid 2030s, and subsequently co-construct AUKUS class SSNs with the United Kingdom from the 2040s onward. This decision represents not merely a expansion of military capability, but a fundamental transformation in Australia's maritime strategy and strategic identity.

At the level of grand military strategy, this signifies a return from the Cold War era focus on homeland defense to a forward defense and power projection strategy employing naval forces. At the level of maritime strategy, it denotes a transition from defensive sea denial to offensive sea control and deterrence by denial. The strategic objectives are the deterrence of Chinese maritime access and indirect pressure on China's bastion strategy in the South China Sea. Various criticisms exist, including risks of nuclear proliferation and arms races, unrealistic acquisition and construction timelines, high costs, constraints on sovereignty, and nuclear waste management concerns. Nevertheless, as of 2025, 67 percent of the Australian public continues to support the AUKUS project.

The concept of strategic hedging was introduced beginning in 2009 during the period of Labor Party governance. The Rudd Government, premising its outlook on the anticipated rise of China and the relative decline of the United States in the near future, formalized the SEA 1000 next generation submarine program. The existing submarine fleet was to be expanded from six to twelve vessels, with offensive capabilities such as minelaying and cruise missiles added. This marked a shift beyond the sea denial strategy centered on homeland defense toward limited sea control and strategic strike capabilities. Industrial policy and security strategy were linked through the principle of domestic construction. In 2013, the Gillard Labor Government adopted the Indo Pacific concept and a policy of international engagement, while pursuing life extension of the Collins class submarines and the development of an improved model. During this period, the Australian government excluded the option of acquiring nuclear powered submarines due to technological, financial, and political constraints.

In 2014, the Abbott Coalition Government criticized China's actions in the East China Sea and envisioned an alliance centered balance of power policy. The displacement of the submarines to be constructed was increased to over 5,000 tons, thereby expanding weapons capacity and operational compartments. However, the land attack cruise missile program envisioned by the preceding Labor government was abandoned, and the acquisition of nuclear powered submarines was likewise not under consideration. In 2016, the Turnbull Government selected the French Barracuda class submarine as the model for Australia's next generation submarine. A contract was concluded at an investment of between 500 and 800 billion Australian dollars, subject to conditions including a domestic construction rate of 90 percent and guaranteed interoperability with the United States. Australia's strategy during this period may be summarized as alliance based balance of power and the strengthening of sea control capabilities.​

In 2018, the Morrison Coalition Government began formulating an entirely new approach. In response to China's expanding influence, economic coercion, and gray zone strategies, the government released the 2020 Defence Strategic Update, declaring its intention to defend the Indo Pacific near region and acquire long range strike and power projection capabilities. Concurrently, it initiated confidential consultations with the United States and the United Kingdom on nuclear powered submarines, and in 2021, despite French objections, terminated the existing contract and announced the AUKUS project. The Albanese Labor Government, notwithstanding the progressive camp's traditional anti-nuclear position, carried forward the AUKUS program and gave concrete form to the nuclear powered submarine initiative through the 2023 Defence Strategic Review and investment plan. Agreements were reached on the rotational deployment of United States and United Kingdom SSNs at HMAS Stirling base in Perth, Western Australia beginning in 2027, the delivery of three to five United States SSNs in the 2030s, and the commencement of joint United Kingdom and Australia construction of SSN AUKUS vessels in the early 2040s. The Australian Submarine Agency (ASA) was established, and institutionalization was carried out to support program implementation in areas including nuclear technology, nuclear fuel management, and workforce development. Australia's strategy has now entered the phase of non-nuclear limited deterrence by denial.

The AUKUS program signifies an expanded role for Australia within the United States led Indo Pacific deterrence architecture, and a deepening of technology and command and control cooperation with the United States and the United Kingdom. The acquisition of nuclear powered submarines will enable extended submerged operations and broad area missions, and will increase pressure on China's bastion strategy. However, negative factors also exist, including excessive dependence on the United States and rising technological and operational costs. Controversy over nuclear nonproliferation norms and sovereignty persists, and Australia's inadequate industrial and workforce base remains a concern. It is anticipated that building a credible deterrent capability will require several decades, and the risk of a submarine capability gap accordingly remains.

The Australian case offers important implications for the South Korean government as it pursues the acquisition of nuclear powered submarines. Australia's experience demonstrates that even where threat perceptions and objectives are appropriate, the feasibility of the means selected is equally important. AUKUS may be understood as a rational response to the Chinese threat, yet significant risks to its realization exist within the constraints of alliance politics and domestic industrial capacity. South Korea, facing North Korea's advancing nuclear threat, requires the development of multilayered means and technological capabilities rather than reliance on any single instrument. While the development of a nuclear powered submarine capability should be pursued over the medium to long term, a multilayered and tiered deterrence posture must be established to ensure that no short term gap in deterrence against North Korea emerges. Strategy is not theory but art, and realistic design integrating political, economic, military, and diplomatic considerations is essential.