ADELAIDE — Funding for the Australian Submarine Agency will increase from $385 million to $512 million in the 2026-27 financial year, a one-third rise, while staffing will grow from about 883 positions to 1,209, an increase of 37%. The agency oversees Australia's acquisition of conventionally armed nuclear-powered submarines under the Aukus partnership.

The 2025-26 budget papers had forecast total resourcing of $1.7 billion for the agency over the four years to 2028-29. The 2026 budget expanded that forecast to more than $2.13 billion across the same period, an increase of $431 million. In the previous budget, the agency's annual budget peaked at $529 million in 2026-27; it will now peak at $641 million in 2028-29.

Aukus is the trilateral deal signed by the Morrison government with the United States and the United Kingdom promising to deliver Australia a fleet of conventionally armed nuclear-powered submarines. The budget papers describe the agreement as a "prudent response to deteriorating strategic circumstances" and state that "Aukus partners have a shared commitment to the partnership and its importance in promoting a free and open Indo-Pacific through an enhanced collective capacity to deter aggression and contribute to stability, peace, and prosperity in the region." The papers also state that for a maritime nation such as Australia, a submarine capability is critical for the nation's defence and for working with partners, and that "the stealth, range, speed and endurance of these submarines is unmatched, and will ensure we have a potent submarine capability for decades to come."

Under the government's optimal pathway for Aukus, the U.S. will sell Australia three Virginia-class submarines—two secondhand and one new—beginning in the early 2030s. The backbone of Australia's proposed nuclear-powered fleet depends on the United Kingdom designing and delivering the first SSN-Aukus submarine, with the Royal Navy's first slated for completion in the late 2030s. Australia will build its first SSN-Aukus submarine, based on the UK design, in Adelaide, with that vessel—the first of five to be built domestically—scheduled to be in the water in the early 2040s. Into the 2050s, Aukus is estimated to cost Australia $368 billion, including about $4.6 billion to be given to each of the UK and U.S. to boost their submarine-building rates.

Australia has not identified a permanent storage site for nuclear waste generated by its nuclear-powered submarine fleet, including high-level radioactive waste from reactor cores and spent fuel. Successive federal governments have spent three decades unsuccessfully trying to establish a nuclear waste site. In 2023, Defence Minister Richard Marles committed to publicly outlining a process for identifying a site within 12 months, and he has said any site will be on defence land, current or future. No plan or site has yet been identified. The 2026-27 budget earmarks $11.9 million over two years for the Australian Radioactive Waste Agency to assist in developing advice to inform Australia's future radioactive waste management and disposal pathways.