The next generation of Australian submarines will be built in Japan for $20 billion and South Australia will only contribute components to the vessels, according to a report.
A senior source told the Adelaide Advertiser that the Japanese are all but certain to win the bid ahead of local manufacturers as well as German and French bids.
An official decision is due to be announced in the defence strategic policy document set for release in 2015.
The Federal Government promised before the last election twelve months ago that the 12 next generation submarines would be built in South Australia. Such a project would cost around $36 billion and employ thousands of manufacturing workers.
However, in recent times speculation that this commitment would not be kept has increased. Last month, the visit of a delegation of about 40 Japanese submarine experts to the ASC facility in South Australia furthered raised concerns that the work would be lost.
In addition, last month Defence Minister David Johnston declined to confirm that South Australia would get the work.
Still, according to AAP, Prime Minister Tony Abbott said the local component of new navy submarines will be built in Adelaide.
“The most important thing is to get the best and most capable submarines at a reasonable price to the Australian taxpayer - as I’ve stressed all along,’’ he told reporters in Queanbeyan on Monday.
“We should make decisions based on defence requirements, not on the basis of industry policy, on the basis of regional policy.’’