(Transcript from SBS World News Radio)
Prime Minister Tony Abbott is being urged to remove Defence Minister David Johnston from his portfolio.
Labor leader Bill Shorten has called for Senator Johnston to be sacked for saying he wouldn't trust an Australian submarine maker to build a canoe.
The Minister has apologised for his comments and Mr Abbott has issued a statement defending the ASC, formerly the Australian Submarine Corporation.
But Labor says that's just not good enough.
Amanda Cavill reports.
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The stoush began when the Defence Minister told parliament the government-owned shipbuilder ASC was $350 million over budget on a project to construct three air warfare destroyers for the navy.
During a debate on whether the government would award a contract to build submarines to Japan, Senator Johnston said ASC couldn't be trusted to deliver on time or on budget.
"They're $350 million over budget on three air warfare destroyer bills. Now I am being conservative. It's probably more than $600 million. But because the data is so bad I can't tell you. You wonder why I am worried about ASC and what they are delivering to the Australian taxpayer? You wonder why I wouldn't trust them to build a canoe?"
The opposition has labelled his comments as an ill-tempered tirade and called on the Prime Minister to remove him from the ministry and the cabinet.
Following the comments, Prime Minister Tony Abbott issued a statement apparently contradicting his defence minister and defending the ASC, saying it played a vital role in supporting the navy.
Mr Shorten has labelled that a startling repudiation of Senator Johnston's ability to handle the defence portfolio.
He says it's clear Senator Johnston is incompetent.
"These comments of the Minister for Defence will affect recruitment and retention in the Navy. It is not that the Government would care about it, a shocking insult to thousands of Australian men and women working at the Australian submarine corporation. Indeed, this is part of a consistent record of incompetence and intemperance that we see from this Minister. Does this hapless Defence Minister realise the hot water he is in? Not at all. That reflects his general lack of awareness of his portfolio."
Senator Johnston has apologised for the comments saying he never intended to cause offence.
He says he regrets his remarks, but says they were born out of frustration over the problems that beset the company.
"I am committed to leading the effort to fix those problems. And regrettably in rhetorical flourish I did express my frustrations in the past performance of the Australian Submarine Corporation. In these comments, I did not intend to cause offence and of course may I say on the record here and now that I regret that offence may have been taken."
The government-owned ASC constructed Australia's six controversial Collins Class submarines between 1990 and 2003.
It's now building three destroyers which are over budget and more than a year late.
ASC also maintains the Collins subs, with the first due to retire in about 2025, prompting a vocal debate on where their replacements will be built.
The government has reneged on its initial promise to build them in Adelaide, where the Collins vessels were assembled.
Among the possibilities is a submarine made in Japan.
Assistant Defence Minister Stuart Robert has told parliament the Coalition is doing a good job with defence, despite legacy issues.
"Seriously are you kidding the nation. The legacy that Labor left when it comes to defence should have their head hanging in shame. A 2009 white paper completely and utterly unfunded, capability thrown to the winds. At the height, the height of what the Labor party was doing to defence, capability spending of the total budget was a mere 18 per cent."
This is not the first time Senator Johnston's handling of defence has come under scrutiny.
Criticism of his performance has come not only from the opposition but from within his own party over his understanding of the issues.
Tony Abbott is widely tipped to reshuffle his frontbench in coming months and the pundits predict he will replace his Defence Minister with Immigration Minister Scott Morrison.
