The federal government faces a voter backlash in South Australia if new submarines are built overseas.
SA independent senator Nick Xenophon, a vocal supporter of building new subs in his state, says he will field candidates in all electorates in the state, taking votes from sitting Liberal MPs.
Coalition frontbencher Steve Ciobo admitted his SA colleagues are worried.
“Understandably there is concern in South Australia,” he told Sky News on Tuesday.
Recent opinion polls show the coalition lagging Labor by about four points in two-party terms nationally, and at a state level SA Labor premier Jay Weatherill has a comfortable 54-46 lead.
Prime Minister Tony Abbott on Tuesday gave “an absolute, categoric guarantee” there will be more submarine jobs in SA.
It was more emphatic than his comment to a recent defence conference in Canberra where he pledged more “sustainment work” in SA, where the navy’s six Collins subs were built.
Three contenders are bidding to build the Collins replacements – Japan with its Soryu-class, French firm DCNS with a conventionally powered version of its nuclear Barracuda-class and German firm TKMS with its new Type-216.
So far only TKMS has specifically undertaken to do the work in Australia.
The government has since hedged on whether the new subs should be built in Australia. Labor has accused it of doing a secret deal for construction in Japan.
Senator Xenophon polled almost a quarter of the Senate vote at the 2013 election, falling just short of two Senate seats.
Capitalising on rising unemployment from the end of the car industry and disaffection about the subs deal, he could potentially sway results in some Liberal seats.
“I’m working very hard to get a number of really credible, strong lower house candidates,” he said.
Opposition employment spokesman Brendan O’Connor said the fear was that Mr Abbott would exercise his “captain’s pick” and have the submarines built in Japan.
“We know that Tony Abbott has had a secret deal with the prime minister of Japan and he’s trying to find his way through it by having a sham evaluation process,” he said.
“And that’s why his government members in South Australia are so nervous.”
South Australian Liberal MP Andrew Southcott said a decision for an offshore build of submarines would be poorly received in his state.
“There is absolutely no question about that,” he told Sky News.
“It would be very difficult for the Liberal Party in South Australia.”
Mr Southcott said his preference was for a local build and both TKMS and DCNS had indicated they could build in South Australia.
Fellow SA Liberal, Senator Sean Edwards, said he had made clear the best bidder would be the one with maximum work for Australia.
“The politics of this is profound. There is no question about that,” he said.
“It’s a very important issue for all Australians, particularly South Australia.”