The 26-year-old Squire will line up at blindside flanker for the Bledisloe Cup and Rugby Championship opener ahead of 81-test enforcer Jerome Kaino, who has been left out of the Kiwi matchday squad altogether.
A two-time Rugby World Cup winner, Kaino was a little short of luck in this year's drawn British and Irish Lions test series.
After a bruising display in the All Blacks' first-test win, Kaino was subbed early in the second test due to Sonny Bill Williams' red card and then earned a yellow card of his own in the drawn third-test decider.
Yet with Kaino now aged 34, Hansen felt it was the right time to mix things up, calling on the nine-test Squire to make his presence felt.
He too suffered his fair share of Lions misfortune, breaking a thumb in the lead-up to the series and missing all three tests.
"He's trained really well since he's come back, played well, he has a lot of energy. We think that energy will suit us well on Saturday," Hansen said.
"It gives us a really good opportunity to see how far he has come. We've still got a very talented man in Jerome Kaino in the wings, waiting to get a crack, and Vaea (Fifita) is also growing all the time.
"We need to start looking to the here and now a bit, but also the future."
The Highlanders-based Squire, for his part, couldn't wait to get stuck into the Australians after coming off the bench in all three 2016 transtasman tests.
He said the presence of fellow loosies Kieran Read and Sam Cane would make life easier, as the Kiwis look to retain the Bledisloe for a 15th straight year.