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Palu, 29, said the prospect of playing against the British and Irish Lions next year was a major incentive to stay in Australia.
"When I considered my options, about whether to keep going here or to go overseas, I kept coming back to wanting more," the Wallaby number eight said.
"More of the Wallabies, more of the Waratahs. I feel that I have more to offer, and more good times to be a part of. When I do leave I want it to be with no regrets."
"It's a once-in-a-career experience if you are lucky enough to play the Lions," he added.
"I didn't want to be sitting there watching the tour go on from a distance, regretting having given up the opportunity to be a part of it."
Sydney-born Palu, who is of Tongan heritage, has played 38 times for the Wallabies and has made 76 Super Rugby appearances for the Waratahs.
Palu has been frustrated by injury in recent years, which has denied him all but two Test appearances in the last two seasons, but he is just five caps away from Tim Gavin as the second most-capped Australian number eight in Tests.
"The last couple of
years haven't been easy. I haven't played nearly as much rugby as I
would have liked, but I've had a good run of games so far this year.
Hopefully that trend continues," he said.
