By Lincoln FeastSYDNEY (Reuters) - Australia's defense minister on Wednesday apologized after saying he would not trust the government-owned submarine firm "to build a canoe", comments that fueled expectations that most work in a A$40 billion ($34 billion) program will go offshore.Reuters reported in September that Australia was leaning towards buying as many as 12 off-the-shelf stealth submarines from Japan.Prime Minister Tony Abbott had previously pledged the submarines would be built in South Australia, where unemployment exceeds the national average, but his government began backpedaling in July, signaling cost and schedule were paramount.Responding to questions in the Australian Senate on Tuesday, Defense Minister David Johnston highlighted a A$350 million-plus cost over-run on building three air warfare destroyer ships and a lack of submarine design experience at Australian Submarine Corp (ASC)."You wonder why I am worried about ASC and what they are delivering to the Australian taxpayer. Do you wonder why I wouldn't trust them to build a canoe'" Johnston told lawmakers."Let's get real here ... This is a professional program that is about national security, and we will take the advice of the service chiefs, not somebody who is looking for a job."Johnston on Wednesday told the Senate his comments were a regrettable "rhetorical flourish"."I was directing my remarks at a legacy of issues and certainly not the workers in ASC who may have in my regret taken offence at those remarks. I consider them to be world class," he said, adding no decision had been made on the submarine program.Abbott, under pressure from South Australian officials and workers to have an open tender for the program, said ASC had exceeded its targets for maintaining and extending the life of the existing Collins Class fleet."Whilst ASC has had challenges meeting the government's cost and schedule expectations of the Air Warfare Destroyer program, we are working closely with ASC on a reform strategy to improve shipyard performance and productivity," the Australian Broadcasting Corp quoted Abbott as saying."It is early days, but the government is confident that ASC and its partners will successfully turn the corner on this important build."The opposition Labor Party called for Johnston to be sacked."It is the largest government procurement in Australian history. It ought to be done properly," Penny Wong, Labor's senate leader said.(Editing by Ruth Pitchford and Jeremy Laurence)Join the conversation about this story Click here to read full news..