New defence minister Stephen Smith will come under pressure to scrap Australia's most expensive defence project - the plan to build 12 submarines at a potential cost of $36 billion.
Defence sources have told The Age that the change in the leadership of the Labor Party and the new government's reliance on the Greens and independents have given some within Defence hope that the controversial submarine plan could be dropped and replaced with a more modest version.
The sources say there is likely to be a stringent review of the most recent defence white paper, in which the submarine plan was first announced, and a new white paper could be drawn up ahead of schedule.
Current Defence Minister John Faulkner has said he will step down from the role, and is set to be succeeded by Foreign Minister Stephen Smith in a reshuffle being announced by Prime Minister Julia Gillard today.
The plan to build 12 submarines is considered to have been former prime minister Kevin Rudd's ''baby'', to the extent that some in the defence community refer to them as ''Rudd's subs''.
There were initial suggestions Mr Rudd might be given the defence portfolio in the imminent reshuffle. But he has now been confirmed as the next foreign minister, removing one potential obstacle to the ditching of the submarine plan.
One of the new independent MPs Labor has relied on to form government, Andrew Wilkie, a former army lieutenant-colonel and intelligence analyst, said he needed to study the case for the submarines before commenting on whether he believed they were affordable. But he said he fully supported a review of the white paper, because ''there were clearly some elements of it that needed addressing''.
''There does need to be a fresh look at the white paper, there are clearly question marks over the document. For example, we can't even crew the submarines we've got, so it is arguable that we can double the fleet from the current six Collins Class submarines.''
Greens leader Bob Brown said his party did not have a concrete position on the submarines, but was keen to see large projects reviewed. ''I think this will be a matter for the whole of Parliament to discuss, including the Opposition.''
Sources say there is a growing belief within the Defence Force - including the navy and the government-owned Australian Submarine Corporation - that the 12 submarines are unlikely to be built and that the money could be better spent.
The 2009 white paper was heavily criticised for focusing on large defence projects, particularly ships and submarines, without a clear explanation of why they were needed and how they would be paid for.
The Australian Strategic Policy Institute's Andrew Davies put out a paper last year estimating the submarines could cost $36 billion. He concluded that a fleet of 12 European off-the-shelf submarines would cost only $8.8 billion.
''Given the potential price tags and the timeframes on these things, it would be surprising if they weren't reviewing it,'' Dr Davies said yesterday.