Al Palazzo, 11 November 2025
Published by The Interpreter, The Lowy Institute
As Australians know, and as their government frequently reminds them, the foundation of the nation’s security is its long-standing alliance with the United States. Australia has honoured the intent of the alliance but has aimed to do so while incurring minimal risk and obligation — fiscally, politically, morally and militarily. But in recent years the government has flipped this policy. Instead of seeking to minimise risk, Australia now embraces it, up to and including participation in a war between nuclear-armed great powers.
It was the AUKUS agreement of 2021 that signalled the reversal of the nation’s low-risk policy. Australia’s new-found appetite for risk cuts across a variety of categories.
The AUKUS agreement itself is laden with risks — it imposes obligations on Australia but offers no guarantees. A major goal is the purchase of three to five Virginia-class nuclear-powered submarines from the United States. However, Washington has given itself numerous ways to back out of the deal. Of particular note is the requirement that the transfer cannot be at the expense of US needs. In the four years since the AUKUS signing, US submarine builders have not sped up their build rate, and the ability to supply both American and Australian needs is highly doubtful. So grave is the issue that the new US Navy Chief of Operations spoke of the uncertainty over the submarine transfer in his confirmation hearing.
As former prime minister Scott Morrison put it, AUKUS is a forever partnership. Consequently, US officials have become so emboldened by Australia’s loyalty that they have requested a statement of Australia’s intentions in the event of war with China over Taiwan. Not only would this be a surrender of sovereignty, it would also place a target on Australia’s back that it need not wear.
In terms of fiscal risk, the AUKUS agreement implies a massive increase in defence spending. At an estimated cost of up to $368 billion, the submarine project represents a monetary allocation that will likely see funding for other government programs fall short.
If by some lucky chance Australia obtains nuclear-powered submarines, it must take on the peril of the disposal and storage of nuclear waste. Australia does not have a way of storing highly enriched nuclear fuel and it doesn’t even have a plan to create such storage. A site will need to operate for around 10,000 years until the fuel decays to safer levels. This is a time frame well beyond the government’s conception, yet any leak or theft of these radioactive substances could be catastrophic.
Australia must also accept numerous secondary risks to avoid jeopardising the AUKUS agreement. These are multiplying due to the challenge of disagreeing with US policy, especially under President Trump. AUKUS ties Australia to a great power whose strength is waning, whose social cohesion is declining and whose moral authority is fading. The extrajudicial killing of Venezuelan civilians has not been challenged by the Australian government. Presumably a fear of upsetting Trump silences Australia’s leadership.
If by some lucky chance Australia obtains nuclear-powered submarines, it must take on the peril of the disposal and storage of nuclear waste.
The Trump administration uses tariff policy to coerce friends and allies to meet its capricious demands. So far, Australia has avoided any significant trade disruption but that is largely a result of the government’s resolve to avoid causing offence. The risk remains that at some point it will be Australia’s turn. Trump is now demanding that US friends accept long-term natural gas contracts from American suppliers. In an age of rapidly declining clean energy costs, such deals make little economic sense and tie these states to fading technologies.
Our nation’s acceptance of risk is perhaps greatest in regards to climate change policy. Our ally is a climate denier which is actively trying to increase fossil fuel production. Australia has shown little interest in pushing the United States to be more ambitious in climate change objectives. Such reticence can only help Australia’s own fossil fuel industries. The fact that, through inaction, Australians will have to live through (and die from) more intense and frequent heat waves, pay more for climate driven disasters, accept a decline in property values and witness the decay of the natural environment, is secondary to the need to avoid upsetting one’s security partner.
Australia’s former approach to risk meant that its morality was not constantly compromised, its defence expenditure and military casualties excessive, or the survival of the nation jeopardised. Without informing the public, the government has switched from a practice of risk avoidance to one of eager acceptance. No risk now seems too great, including Australia’s participation in a great-power war. In their rush to appease the United States, Australia’s leaders have sacrificed much and gained nothing.
Published by The Interpreter, The Lowy Institute, 10 November 2025
Al Palazzo’s latest book is The Big Fix, Melbourne University Press, 2025.