In September 2021, the Australian government announced that it would be cancelling an $80 billion deal with France to build 12 diesel-electric submarines, known as the Future Submarine Program. The decision was made in favour of the new trilateral defence alliance, AUKUS, with the United States and the United Kingdom, which would see Australia acquire nuclear-powered submarines.
The decision to acquire nuclear submarines was a major shift in Australian defence policy. Australia had previously been opposed to the use of nuclear weapons, and it had no experience with nuclear propulsion. The announcement also prompted strong reactions from the Chinese government, with more than 60 phone calls being made by ministers to their "counterparts in the region to calm fears about nuclear proliferation."
The cancellation of the French deal resulted in a rift with the Australian and French governments, with the French stating they had been "stabbed in the back" and "betrayed." French President, Emmanuel Macron, after being asked whether he thought then-Australian Prime Minister, Scott Morrison, had lied to him by not being open about the dialogue between Australia, The United States and the United Kingdom in procuring nuclear submarines, responded: "I don't think, I know."
The Australian government has since paid France $830 million in compensation, resulting in a total cost of $3.4 billion to the Australian tax-payer as a result of the cancelled deal. Just weeks before the deal was cancelled, Australian defence officials were ready to report on the "good progress' made regarding the project
The new nuclear submarine program is expected to cost up to $370 billion over the next 30 years, with one submarine being built every 2 years starting from the early 2040s.