Well I think Australia needs to play to it's strengths
Soft power is really important here - I can't think of a single Country in the area (other than maybe New Zealand
) that doesn't prefer Oz to China - culture, lifestyle, people so the Chinese are always trying to roll a big ball uphill and only have $$$ to offer - and when they arrive it all goes badly wrong.
Secondly spend money training the Philippines and Indonesia military - forget air power - you want a lot of infantry and maybe a lot of small warships - enough to bog any Chinese move south down.
Invest in ultra long range recce - drones and more 737's
Mines - in WW2 mining the S China sea and coastal Japan was probably more effective than anything else that was done up until the A bomb