WA Treasurer Mike Nahan says South Australia's ship building industry is a “basket case”, and Western Australia should run the nation's naval supply program.

While New South Wales MP Marise Payne is the new Defence Minister, South Australia's Christopher Pyne has been handed the Industry portfolio.

In his new role, Pyne will be central in the decision making around the next batch of ships and subs, and many believe he will want to get as much as possible for his home state.

It comes amid speculation that Prime Minister Malcolm Turnbull had to strongly favour both South Australian politicians and those from the Nationals in order to secure the votes for his deposition of Tony Abbott.

But Dr Nahan says WA company Austal has an outstanding record as a ship builder for the Australian and US navies, and that Mr Pyne's role as Industry Minister blind him to South Australia's disadvantages.

“We have something else that they do not have,” he said.

“We have others, Julie Bishop. But we have a very efficient shipbuilding company, they have, let's be honest, a basket case.”

Austal builds civilian and defence ships at a site near Fremantle, making a range of naval and customs patrol boats for the Commonwealth, as well as high-speed catamarans for commercial customers.

At another shipyard in Mobile, Alabama, Austal has been building the new generation of stealthy Littoral Combat Ships for the US Navy.

“[Austal] is well-positioned, both in terms of the submarines and the frigates and I'm very optimistic that we'll get significant on the defence [projects] going forward. And these are long term projects,” Dr Nahan said.