The reason is more to do with politics than anything else.
There are lots of misconceptions about nuclear power and for that reason it will always be a tough sell to the public. Although perhaps not as hard as some people think. I suspect that the general public is coming around to the idea that nuclear power isn't the big bad that they were led to believe.
The other problem is the concern the public might have is that these boats would have to be built and largely maintained overseas. Once again I wouldn't necessarily see this as being impossible to sell. A nuke would probably be cheaper than the option we are looking at and you probably wouldn't need as many of them. The money saved could be used for many other things.
I might be missing something obvious ... but I really don't really see any other unresolvable issues.
Until we can have a clear, open (and mature) debate on the 'nuclear' question in Australia, then discussions about nuclear subs is, unfortunately, a waste of time.
And until both sides of politics support a more advanced nuclear industry (and submarines too), it is still a waste of time.
Have a look at the link below (and especially the section on opinion polls):
https://en.wikipedia.org/wiki/Nuclear_power_in_Australia
Whilst the left and right of politics currently agree on certain defence procurements (such as the F-35, which is supported by both sides), until there is the possibility that they would 'both' support nuclear, then I still think it won't happen. And as far as I know the ALP still has an 'anti nuclear' policy.
The polls are interesting, the majority of Coalition voters for example would support nuclear power stations, on the other side of the coin, ALP voters are almost the exact opposite.
Get both sides of politics on the same page, then the possibility exists, but until that happens, I'm not going to hold my breath!!!