Prime Minister Malcolm Turnbull should be "absolutely ashamed" that Germany is building the first 25 tanks under a $5 billion defence contract awarded to Queensland, Victorian Premier Daniel Andrews says.
Victoria lost the Land 400 contract to Queensland, but the first tanks won't be built in the sunshine state because the German company doesn't have a factory there yet.
"We were ready to go and we would have with that BAE bid we would have been underway using Australian defence funding and Australian taxpayers' dollar to create Australian jobs," Mr Andrews told reporters on Sunday.
"The federal government went a different way, it seems they're more interested in economic development and job creation in Germany than economic development and job creation in Australia."
But Deputy Liberal leader Julie Bishop insisted the arrangement was always part of the tender.
"The whole idea was that the first few vehicles - the prototypes if you like - would be built in Germany so the Australian workforce would be able to be educated and understand the intricacies of the design as intended," she told reporters in Cairns.