SYDNEY (REUTERS) - Australia's defence minister has said he would not trust state-owned Australian Submarine Corp (ASC) "to build a canoe", fuelling expectations that most work in a A$40 billion (S$44.48 billion) programme will go offshore.

Reuters reported in September that Australia was leaning towards buying as many as 12 off-the-shelf stealth submarines from Japan.

Responding to questions in the Australian Senate on Tuesday, David Johnston highlighted cost over-runs on other projects and a lack of experience in submarine design at ASC.

"You wonder why I am worried about ASC and what they are delivering to the Australian taxpayer. Do you wonder why I wouldn't trust them to build a canoe?" Johnston told lawmakers.

"Let's get real here ... This is a professional programme that is about national security, and we will take the advice of the service chiefs, not somebody who is looking for a job."

Prime Minister Tony Abbott had previously pledged the submarines would be built in South Australia, where unemployment exceeds the national average, but his government began back-pedalling in July, signalling cost and schedule were paramount.

Abbott is now under mounting pressure from regional officials, labour unions and members of his own party to have an open tender to build the next-generation submarine.