Been a few years since I presented a paper on the defensive use of diesels with AIP. For a continent sized country like Australia, you'd need at least three operating bases, each with a few subs and supporting infrastructure, and one ship yard where any of the fleet can get refit/overhaul.
For a smaller country with a shorter coastline -- say, Iran -- who have mostly shallow water in their defensive zones, it's a very good fit (capability/manpower/budget/industrial capacity combination). Same is true for the Baltic nations, and arguable for quite a few of the Mediterranean nations.
The discussion on what AIP/Diesel does for your overall posture is very dependent on how you see your overall regional mission and alliance structure. Not a simple formula when you cast forward 10-15 years into the future to try and figure out the right mix. (fdr's point is a reasonable one, but the issue of foreign basing rights was well raised by Asturias).