The man who chaired the government's national commission of audit says Australia's new submarines should be built in Adelaide not overseas.
Tony Shepherd, former president of the Business Council of Australia, said the government should have confidence that with the right procurement procedures and contractual arrangements and with construction in privately-operated dockyards, future submarines and frigates could be successfully built in Australia.
He said it wasn't fair to use the troubled Air Warfare Destroyer project, running three years late and $1.2 billion over budget, as the key criterion for decisions about local defence industry capability to undertake future naval construction in Australia.
Better examples were the Anzac frigates project, which delivered 10 warships on time and on budget, and the Collins submarine project.
Despite well-known problems with systems integration, submarines were successfully constructed in Adelaide.
"We should have confidence that we can successfully build complex warships here, adding to our high technology base and giving us the intellectual property and local capability to maintain, modify and update naval vessels over a 30-year operating life," Mr Shepherd said in an article on the Australian Strategic Policy Institute website.
The government is now evaluating three international contenders for replacements of the ageing Collins submarines.
It hasn't stipulated that the new vessels be constructed in Australia.
Mr Shepherd said the lessons learnt from past projects should be applied to the acquisition of the new submarines.
He said the Anzac and Collins projects followed well-established procurement procedures, starting with careful identification of navy requirements.
After selection of a short-list of experienced offshore designers, funded project definition studies led to the submission of fixed price tenders for a local build, which maximised the involvement of Australian industry.
"The Abbott government should follow this well-proven, risk-reduction path," he said.
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