A Defence discussion paper that will help set the direction for military spending has raised questions over the future of local manufacturing.

It is a $250 billion industry helping to keep Australian manufacturing afloat, but the tide is turning and building submarines and other naval vessels on our shores could be under threat.

The Federal Government discussion paper on the future of the defence industry released yesterday says tough choices need to be made on defence spending, in particular how Australians can get the best value for money.

That is fuelling fears that the Coalition will buy submarines and military ships from overseas rather than build them here.

Australian manufacturing has already been hit by the collapse of car makers Holden, Toyota and Ford with an estimated 8,000 job losses.

Buying submarines and other defence equipment from overseas would also hit hard.

Up to 12 submarines have been slated to be built by ASC (Australian Submarine Corporation) in South Australia, but that is in doubt.

The Federal Government says local manufacturing has performed poorly with inefficiencies, delays and cost overruns in major projects such as the air warfare destroyer.

It has already offered contracts to build two navy replacement replenishment vessel to companies in South Korea and Spain.

‘Put on our banana republic T-shirts’

The moves are raising questions as to whether the Government wants a local defence industry at all.

“If it does then it needs to support and partner with it to collaborate and deliver military capability,” said Chris Burns, the CEO of the Defence Teaming Centre.

“If it doesn’t then let us know. We can put on our banana republic T-shirts, learn how to pick fruit, dig ore out of the ground and serve drinks to wealthy tourists.

“Because, ladies and gentlemen, that’s all there will be left for our de-industrialised nation to do.”

Speaking at a defence industry conference in Adelaide, Defence Minister David Johnston reiterated the Government’s commitment to its target of 2 per cent of GDP for defence spending, but not necessarily spending the money in Australia.

“I emphasise the need for Defence to be able to procure the necessary goods and services in the most efficient way to ensure the ADF can fight and win on the battle field,” he said.

The discussion paper will guide the public consultation process for a Defence white paper due to be released next year. Until then, the defence manufacturing industry waits.