PM says Labor wants subs built in Russia

Tony Abbott has accused Labor of seeking to open the way for Russia and North Korea to bid on a $25 billion-plus submarine contract while shutting out Japan.

The prime minister also said it was "a bit rich" of Labor to complain about the way the coalition was going about deciding who would design and build the vessels when it had procrastinated about the issue for the six years it was in government.

In the latest round of the submarine war of words, Opposition Leader Bill Shorten said the government clearly could not be trusted with the decision to replace Australia's ageing Collins fleet.

The government is standing by its plan to use a competitive evaluation, rather than an open tender, even though it has struggled to explain the process.

Mr Abbott argued there was quite a difference between the two terms even though they were both a competitive process.

"An open tender is there for anyone and the last thing we would want to see is a Russian company, for argument's sake, bidding to produce an Australian submarine," he told reporters on Wednesday.

In parliament, the prime minister went further.

"Only Labor wants to see Australian submarines possibly built in Russia or North Korea," he said.

Mr Abbott accused Mr Shorten of xenophobia by opposing a likely Japanese bid.

"He says we can't possibly have Japanese involvement in the submarine contract because of what happened in Sydney Harbour," he said, referring to the Japanese submarine attacks on Sydney Harbour in 1942 during World War II.

The new submarines project will be Australia's largest defence procurement, estimated to be worth $20-40 billion.

There's been speculation the government has all but decided to buy Japanese Soryu-class submarines, with the vessels built wholly or partly in Japan, with limited or no work for Australian shipbuilders.

Mr Abbott's reference to Russia and North Korea was an appealing line, but one which opposition defence spokesman Stephen Conroy had countered a day before.

A tender process could be structured to limit who could participate, the senator said and that was unlikely to include Russia or China.

A delegation from the Australian Manufacturing Workers Union spoke to Liberal MPs in Canberra in a bid to convince them to stand by an election pledge to build the submarines in Australia.