Former Australian prime minister Paul Keating has taken aim at Prime Minister Anthony Albanese, Foreign Minister Penny Wong and Defence Minister Richard Marles, accusing them of abandoning traditional party values.

Speaking to 7.30 in an interview about the AUKUS agreement, Mr Keating accused the government of being a "sellout" on its defence policy, while defending Chinese interests in Taiwan.

"In defence and foreign policy, this is not a Labor government," Mr Keating said.

"This is a party which has adopted the defence and foreign policies of the Morrison Liberal government.

The former Labor leader had been asked about the AUKUS agreement between the US, UK and Australia, which he has been a constant critic of since its announcement.

Mr Keating then called it "the worst deal in all history".

Mr Marles is in the US and has agreed to allow the transfer of US and UK naval nuclear material to Australia.

The partnership also provides for more rotations of US troops to the region, which Mr Keating criticised.

"What he said made me cringe … it will make any Labor person cringe," Mr Keating said.

"There'll be American force posture now in Australia, involving every domain.

"This government has sold out to the United States.

"They've fallen for the dinner on the White House lawn.

Is China or the US aggressive?

Defence Minister Marles has been vocal about the need for the partnership and being allied with the United States in the face of an increasingly aggressive China.

China has been involved in several incidents with regional neighbours in the South China Sea and the defence minister himself was, in June, confronted by Chinese PLA officers in Singapore.

Mr Keating says the AUKUS agreement and Australia's longstanding alliance with the United States, which he called an "aggressive ally", is what may make Australia a target for any incident with China.

"We are better left alone than we are being protected by an aggressive power like the United States," Mr Keating told 7.30.

Asked why he considered the US to be aggressive, Mr Keating said it was because "it's trying to superintend from the Atlantic, the largest Asian power, which is China".

'Chinese real estate'

One of the major global flashpoints with China is the future of Taiwan.

The island remains self-governed but China looms large, having recently held War Games in the Taiwan Strait, where it regularly flies military sorties.

Chinese President Xi Jinping has routinely said he would not hesitate to use "force" to claim Taiwan.

Mr Keating labelled the island "Chinese real estate" on 7.30, when talking about Australia's defence pact with the US.

"What this is all about is the Chinese laying claim to Taiwan, and the Americans are going to say 'no, no, we're going to keep these Taiwanese people protected', even though they're sitting on Chinese real estate," he said.

Asked about the wishes of the Taiwanese people, and China's threat to dismantle civil society in the country, Mr Keating told 7.30 Taiwan was not a vital Australian interest.

Should conflict arise between the US and China over Taiwan, Mr Keating said Australia would be the nation that would ultimately lose out.

"The Chinese will fight to the last teenage soldier to defend Taiwan and the Chinese state, and the Americans will not take on such a fight and more than that, will not win it.

"[Then] all of a sudden the Americans take off and leave and we're the ones who have done all the offence."