The "smell of electoral defeat" is nudging the federal government towards a local build for Australia's next fleet of submarines, South Australian Independent Senator Nick Xenophon says.
A shift in language from coalition ministers, suggesting a local build is more likely, is a welcome development, Senator Xenophon says.
But he says vigilance is required to ensure the federal government guarantees at least 70 per cent of the work is done in Australia.
"There's nothing like the smell of electoral defeat to sharpen the mind," Senator Xenophon told reporters in Adelaide on Wednesday.
He said he was growing confident that the new Turnbull administration would opt for a local build, suggesting the commonwealth was "bowing to the inevitable" that it made both economic and strategic sense for the 12 submarines to be built in Australia.
The senator's comments followed indications from Industry Minister Christopher Pyne that he was hopeful of the state and federal governments coming up with a proposal for a full domestic build.
Cities Minister Jamie Briggs later backed Mr Pyne's comments, saying he was confident the submarine build would be centred on Adelaide.
"These are decisions based on Australia's national interest and Australia's national interest, in my very strong view, is very much to have submarines built here in Adelaide," he said.
But SA Defence Industries Minister Martin Hamilton-Smith said the state government was still working to secure a commitment from the federal government to build 12 submarines in Adelaide.
"Until that is written in stone, nothing has changed," Mr Hamilton-Smith said.
He hopes to meet with new Defence Minister Marise Payne soon, something Opposition Leader Steven Marshall managed to do on Wednesday.
Mr Marshall wouldn't reveal the substance of their talks in Canberra but said he looked forward to hearing a positive announcement for South Australia on the largest procurement exercise in the nation's history.
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