I never build many subs, I tend to go for destroyers combined with Battleship and 1-2 cruisers maybe 1-2 subs. Now with this in mind, you can make a few stacks of cruisers and take out the troops from the islands then take it over with what you like ( AT,AA) militia takes food from and they are not that great of a troop, I don't even research them. So you can take islands without any loss now.
Secondly once you took the far islands, make a airfield and put some naval bombers so they can scout any sub or convoy that is coming towards you for far away. For a good defense of your land, I don't suggest to cover the water with subs, only crucial points , make some planes connect all across Australia and you can move fast anywhere if there is a problem.
As for diplomacy, check your surrounding players see who is active and has ended some games and start making plans with them on how you can rule the world.
