Once the states competed tooth and nail for defence industry work but now South Australia and Victoria are joining forces.
Facing loss of their car industries, the two states have signed an accord on joint cooperation in seeking defence business.
They will advocate for national defence industry policy reform and for minimum local content for all defence purchases.
The accord demands the federal government commit to building the navy's new submarines in Australia and commit funds to a 30-year plan for new ship projects.
It also calls for the government to provide immediate funding for a fourth air warfare destroyer and to reopen tenders to allow Australian shipbuilders to bid for construction of two new supply ships.
That coincides with release of a report from the Rand Corporation which examined Australia's shipbuilding sector.
It said Australia paid a premium of up to 40 per cent for local ship construction but a sustainable and cost-effective industry was possible if the government adopted a continuous build strategy to turn out a new ships every 18-24 months.
South Australian premier Jay Weatherill said industry needed continuous work over 30 years to allow investment certainty, development and sustainability of workforce skills.
Australia would be crazy to send this work overseas, investing in shipyards in Japan rather in Australia, he said.
"We can be an important ally, an important partner in ensuring the defence needs of our nation are met and we stand ready to form that partnership with the Commonwealth government," he told reporters in Canberra.
Victorian premier Daniel Andrews said the shipyards were paid for with taxpayer dollars and they ought to support Australian jobs.
"We have the people, the skills, the capability to do this job well," he said.
"If only they had a Commonwealth government that was prepared to place an order. It's an order book we need, a longterm flow of work."
Defence Minister Kevin Andrews dismissed the premiers' pact.
He said they should have lobbied the former federal Labor government harder, because it didn't commission a single naval vessel from an Australian shipyard in six years.
South Australia and Victoria were already getting significant defence investment over the next four years - $4.6 billion and at least $3.8 billion respectively.
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