(Transcript from SBS World News Radio)
There are growing concerns the federal government is laying the groundwork to abandon its election promise to build 12 new submarines in South Australia.
The Government is reportedly considering buying the submarines from Japan instead, but it insists it has not made a final decision.
The reports have raised questions about the ramifications of such a decision on Australia's relationship with its regional partners.
And they have raised questions as well about what it could mean for national security into the future.
Amanda Cavill reports.
(Click on the audio tab above to hear the full report)
Prime Minister Tony Abbott says the local components of the new navy submarines will be built in Adelaide.
But he will not promise the vessels, set to number up to a dozen, will be made entirely in Australia.
There are reports the next-generation submarines will contracted to Japan.
Mr Abbott says the details of their acquisition and construction are still subject to a range of further decisions.
He says the most important thing for Australia is to get the best and most capable submarines at a reasonable price.
"The precise nature of how we are going to do our next generation of submarines is still subject to a whole range of further decisions, but the most important thing is to get the best and most capable submarines at a reasonable price to the Australian taxpayer. As I've stressed all along, we should make decisions here based on defence requirements, not on the basis of industry policy, on the basis of regional policy."
It is understood that, if the deal goes ahead, as many as 12 Japanese submarines could be bought for about 25 billion dollars and delivered earlier than if built in Australia.
It is estimated the cost would be between $50-80 billion to design and build the submarines in Australia.
The Collins submarines will be decommissioned from 2026, and the new submarines could possibly not be ready until 2032, leaving Australia with a serious capability gap.
The Government has said it plans to order at least eight submarines, possibly 12.
Australia's strengthening trade ties with Japan are also believed to be a key to the Government's considerations.
South Australia's Premier Jay Wetherill says he does not accept the submarines can be built overseas at a cheaper and more effective price.
Mr Wetherill says it is also, strategically, a problematic move.
"I think that any rational analysis about our strategic defence needs in this nation, about the imperatives to keep jobs here ... (We're) talking about ships and submarines, something like $250 billion worth of expenditure over the next 30 years. The idea of that being spent elsewhere doesn't make sense from a strategic perspective, making sure that you're essentially reliant on a foreign nation for your own defence capabilities."
Opposition Leader Bill Shorten says the decision to go offshore could do serious damage to Australia's ability to build and maintain vessels and cost large numbers of jobs.
And Mr Shorten says not only would such a move cost jobs, it would put Australia's national security at risk.
"We are an island nation. Our national security depends upon keeping skills in Australia. The Abbott Government is contracting out the national security of Australia to other parts of the world. We live in uncertain times. Why on earth is the Abbott Government exposing a maritime nation like Australia, an island nation like Australia, a proud nation in uncertain times of international security, to not having the best possible submarines with the best possible security and jobs for Aussies?"
The Australian Strategic Policy Institute's Mark Thomson says South Australia cannot compete with other countries on cost so it is no surprise the Government is looking overseas.
But he has warned the ABC, if the contract does goes to Japan, it could have geopolitical ramifications.
"Japan is, of course, a close US ally, as is Australia, and, by pursuing a deal like this with Japan, it's really strengthening the inter-linkages between US allies in the region, which, at this current point in time, is very significant, given China's rise."
Australian National University national-security professor Michael Wesley says it is hard to gauge how China would react.
Professor Wesley says China has been taking a broader view of how regional relationships work after early tensions with the Government over issues in the South China Sea.
"I think it depends on how the Chinese seek to interpret this. They could seek to interpret this as yet another step in a drawing closer of Australia-Japan relations. Or they could choose to act pragmatically on this and decide that it's in their overwhelming interest to establish a stable relationship with Australia. To some extent, they've got an element of disquiet about how this government is drawing closer to Japan and closer to the United States."
The final decision will be announced in the defence strategic policy document set for release in 2015
Two previous white papers proposed 12 next generation submarines should be built in South Australia, where the navy's six Collins boats were made.
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