High power submarine diesels, that are already in use, including those that act as backups in nuclear submarines, need to be explored as a diesel option for Australia. Such diesels may be less technically risky than Australia buying new "orphan" (ie. Australian use only) dielsels.
Australia's current orphan diesel is the Collin's (ex locomotive specialised) Garden Island-Hedemora which has proven unreliable and hence is subject to RAN ordered performance restrictions. Hedemora Diesel is so orphaned that in February 2006 it was bought by Australian company Coote Industrial Ltd.
An Australian future submarine diesel option that deserves investigation is the Fairbanks-Morse 38ND 8-1/8 diesel being used for backup on USN Ohio, Seawolf and Los Angeles class nuclear subs. See the bottom of this site http://www.fairbanksmorse.com/marine/.
Significantly French associated MAN works with Fairbanks-Morse - “[see F-M website] FM-MAN engines are manufactured under license from MAN Diesel.
Current and Still being fitted for nuclear submarine backup use is the Caterpillar 3512B V-12 Twin-turbo charged diesel. The US Viginia class SSN use these diesels as backup (bottom of another site) described in 2004. Closely related 3512C on Caterpillar site. Also here , here and here).