I think that nuke subs for oz make oz a bigger target because they are attack weapons, not defensive weapons - and yes, nuke arms would make it more so
if we think about it from an potential enemy point of view -
here's this Oz mob -------- way to the south, and they've got these nuke subs which are designed for long range and offensive roles
are they are threat to us? ------------- Yes.
or
here's this Oz mob -------- way to the south, and they've got these diesel electric subs which are designed for short range and defensive roles to protect their own coastline