Future ship and submarine building in South Australia will create 8000 jobs, independent modelling shows.
A report published by PwC says the creation of the naval shipyard in Adelaide will add more than $130 billion to the state's economy and boost the gross state product by 3.5 per cent.
Defence Industry Minister Christopher Pyne says he knew the figures would be strong but was surprised by the scale of the forecast.
He says the specialised skills needed to build a submarine have been likened to a space shuttle, where advanced manufacturing doesn't hurt Australian businesses in the same way traditional manufacturing does.
"The labour costs become much less important and that's why advanced economies like Germany, France, Britain, the United States and Australia can build these kinds of manufacturing bases in a way we can't for T-shirts and shoelaces," Mr Pyne said.
But there remained plenty of room for manufacturing of all kinds in Australia as long as industries and bureaucrats committed to research and development, Australian Manufacturing Workers' Union's state secretary John Camillo said.
"Governments and certain people are talking down manufacturing when there is a strong opportunity to keep building manufacturing and making things in Australia," Mr Camillo said.
The PwC report predicted 3500 jobs would be created in direct shipbuilding and 4550 in related industries through the commonwealth's commitment to build submarines, frigates, and some patrols boats in Adelaide.
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