Frankly Pete, I believe the smartest and cheapest defence policy Australia could implement is inserting a clause into our Constitution:
Australia will NEVER cross the borders or interfere with the rights of sovereign nations to self determinacy without a clear mandate by referendum of Australian citizens.
The first step to peaceful coexistence must be a declaration of non aggression.
By designing a defence force which is actually defensive we not only save billions on aggressive weaponry, but also send a clear signal that we are a civilized nation which believes the real enemy in war is always war itself.

G'dayBruce

What you seeking would require a major cultural, political and economic shift for Australians.

On Defense Industry Board - this is what http://en.wikipedia.org/wiki/Defence_Materiel_Organisation (DMO) is meant to be - under the direction of the National Security Committee of Cabinet.

Independent Australian defence inevitably includes nuclear weapons, nuclear powered subs and lots of both to fend off any Chinese or other threats. No nuclear weapons would expose us to nuclear blackmail. Such a nuclear force might take 30 years of high defence spending to develop and buildup.

Building a nuclear power industry and consumer goods industries in parallel would make sense.
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Hi again Grim

Being neutral, or non-aligned generally doesn't work. China or India would love our resources and could aggressively force us to hand them over below cost - or extracted by their own people.

Neutral countries are frequently invaded or tacitly (Switzerland and Sweden) under the nuclear umbrella of great powers. Australia, out on a limb, doesn't enjoy the protections of being in Europe.

Arguably nuclear weapons are primarily for defence-deterrence as are subs, destroyers, tanks and jetfighters.

Regards

Pete

I can't agree with Australia becoming nuke armed, that would be a step too far IMO.
Since we have no need of offensive capabilities our major military defense requirements are best served by a sub force, that and a strong decentralised air and ground force gives us options that would make any attempt to invade extremely expensive, hopefully too expensive.
Think..."junkyard dog", scary as but purely defensive.

Hi Rhrosty

I admire your pluck, panache and je ne sais quoi. Australia needs a military innovator, a seer, a Sir Basil http://en.wikipedia.org/wiki/B._H._Liddell_Hart and you are it.

Though Australia can't yet build a plane invisible to radar.

Can't yet build an http://en.wikipedia.org/wiki/Bell_Boeing_V-22_Osprey or Harrier like VTOL aircraft.

Can't yet make homemade smart bombs as good the Yanks.

Can't yet build a sub that virtually flies through the water or build underwater capable rockets.

This shouldn't deter us from developing, reverse-engineering and building our own military hardware.

I agree self sufficiency in extracting and refining fuel should be a strategic priority for Australia.
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Hi again G'dayBruce

Yes I agree that an expanded sub force is necessary. Also greater decentralisation of military away from so many "eggs" in NSW and Victoria is needed.

Regards

Pete

Everyone has overlooked one absolutely over riding fact.
In the event of a war, hot or luke warm, any submarines we have will
have to operate without a fuel supply.
At the first sign of a conflict the "enemy" will only have to sink one
tanker on its way to Australia and all petrol and diesel supply will cease.
Short of seizing another countries tankers the insurance companies
would stop all further oil deliveries to Australia.

If a nearby country with which we were having a confrontation attacked
an oil tanker, then once the subs ran out of fuel they would be lucky
to get another topup.

We will have no oil refineries, so we will not be able to refine any
oil we might still be producing.

As far as I can see nuclear submarines and warships MUST be nuclear powered.

Cont:
I forgot, of course they could be coal fired, well at least surface ships could be.