First of all, Collins is an SSG rather then an SSK.
I concede your point, however I mildly disagree as to its use as to my mind if it applies to the Collins then many Type 209s, Agostas and Kilos are SSGs and the Virginias are SSGNs because they all fire guided ASMs. I may be in a minority of one, but to my mind the G in SSG should indicate Tomahawk-type cruise missiles as originally intended.
Before the discussion erupts into internecine violence, I have long ago given up any hope that hull classifications, naming and numbering are applied systematically and equally in an orderly manner. They are as meaningful as the GLX on the back of a Hyundai.
Second of all, why wouldn't Collins II require top of the line systems? As far as I'm aware from publicly available data, the combat system fitted to the Collins class is a varient of the CCS Mk.II (as fitted to LA class, Ohio class & Virginia class?) with modifications to 'speak' to the sensors fitted to Collins.
As StinrayOZ has pointed out, the thrust of my argument was that Japan has a history of domestic development of systems with little regard for costs, which may be great for Japan on the technology innovation front, but bad for Australia to spend twice as much for a system that may not be better in capability than a MOTS system from the US/Europe.
It is hard to quantify at what level indigenous Japanese sensors/weaponry is because Japan doesn't export it, but I'd bet my left nut that the
Mitsubishi F-2 isn't three times as good as a licence-produced F-16, and I'd wager both of them that it isn't as good as the dinosaur-nicknamed-air-dominance-fighter-that-shall-not-be-named (and I'll send a premium chocolate treat to anyone who seriously suggests an RAAF F-2 purchase to "the others").
Thirdly, the cost savings and benefits of a joint design come from designing a single platform and (hopefully) systems integration, rather then paying for the development of two separate platforms and system.
I agree but...once you start losing Japanese systems (or foreign systems if looking from the Japanese side) that might be inferior/similar/superior/too expensive/not suitable then the savings made from joint development start dropping. It isn't just a matter of the combat system either, as that may be a reasonably simple change to account for at the design phase.
What if the Japanese diesels don't suit Australia because they have chosen AIP and the RAN doesn't? What if the Japanese methods of submarine manufacturing aren't suitable or compatible with ASC (I don't know one way or the other, it is just an example)? That has to be done at the design phase.
You'd also want to have the IP for the Collins-class sewn up, because you wouldn't want Kockums screaming any more than they have about transfer of secrets to Japanese submarine designers. Much less hassle IP wise if the submarine was being designed in Australia with input from overseas, with proprietary information compartmentalised as much as possible.
If it can be be done, and the result is a design that both parties would be happy with then it wouldn't just be great, it would be ideal. But if it is done because everyone is a bit insecure and shy after the Collins, then it is being done for the wrong reasons. I don't have a preference in this debate as I'd just be happy with a suitable, uncontroversial platform that quietly goes about its business. That pun was intended.