In a press conference spruiking the government's plans for local shipbuilding in the wake of a poor performance in a South Australian state by-election, Defence Minister David Johnston also said he would create a "sovereign submarine industry" but refused to give any detail as to what that involves.

Some Liberals have blamed the bad result in the the SA state seat of Fisher at the weekend partly on Senator Johnston's recent claim that he wouldn't trust the Adelaide-based government shipbuilder ASC to "build a canoe". Nervousness is compounded by the fact that a by-election is also set for the neighbouring seat of Davenport next month.

Senator Johnston unveiled what he said was a "three-point plan" for shipbuilding: fixing the over-budget and behind schedule AWD project, creating the sovereign submarine industry, and developing a local industry around the building of future frigates within Australia.

Finance Minister Mathias Cormann, who also fronted the press conference, said the success or otherwise of getting the $8.5 billion AWD project back on track would guide the government in future decisions about the fate of local shipbuilding.

He said it was "critically important that we get the Air Warfare Destroyer program back on track so that we can demonstrate the capacity to deliver any future shipbuilding project competently, on time and on budget".

But he refused to explain whether further delays and cost blowouts on the project – which is already nearly two years over schedule and at least $600 million over budget – would constitute a failure for the project's remediation and therefore doom local naval shipbuilding.

He said there was still "work to be done to really get to the bottom of where the line in the sand actually is".

"If we are not able to get this back on track in an appropriately efficient and effective way, then obviously that is going to be a problem in terms of demonstrating our future capacity to deliver the essential projects," he said.

Senator Johnston meanwhile refused to say whether his plans to create a "sovereign submarine industry" would involve building the boats locally or only maintaining foreign-built boats in Australia.

Senator Johnston has been on the back foot on the issue after promising in opposition to build 12 submarines in South Australia but then drifting away from that promise in government, with strong speculation that the government is planning to buy submarines from Japan.

After announcing the submarine industry plan, Senator Johnston then refused to spell out any detail, telling reporters: "If you're expecting me to give an announcement today as to what the exact route and way forward is you'll be a little disappointed."

But he said Australia needed, one way or another, the "underpinnings of a successful, sustainable submarine enterprise or industry" as a "first step" to making sure the nation has a regionally dominant submarine.

Senator Johnston also brushed aside claims by a Liberal colleague that his recent incendiary remark that he would not trust Adelaide-based government shipbuilder ASC to "build a canoe" had contributed to the Liberals' disappointing performance in a state by-election at the weekend.

South Australian MP and Assistant Infrastructure Minister Jamie Briggs said at the weekend that Senator Johnston's canoe remark was "very, very unhelpful".

Senator Johnston, when asked about the loss, said he would "reject the premise of that given the Labor party had a primary vote of 27 percent".

Under the AWD rejig, ASC will remain a lead shipbuilder in the project's alliance structure, but greater management responsibility will temporarily be given to another key alliance member, Raytheon Australia, backed up by contractors BAE Systems and Navantia SA.

Senator Johnston blamed Labor for the expected broken promise over building 12 submarines in Adelaide, saying he had "swallowed whole" the then-government's claim that it was making good progress on the submarine program.

"They misled the whole of Australia to say, 'We're doing something on 12 Walt Disney-style submarines set out in the 2009 White Paper', then did nothing."

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