Labor has agreed that Australia’s defence manufacturing industry ought be exporting more, but it has questioned the Turnbull government’s ability to turn the industry into an exporting powerhouse.

The Greens have attacked Labor for failing to criticise the government’s plan more forcefully, saying it is trying to walk both sides of the street.

The Turnbull government unveiled a controversial plan on Monday to see Australia become one of the world’s top 10 arms exporters within the next decade.

Hailing it a job-creating plan for local manufacturers, it said Australia only sold $1.5bn to $2.5bn in “defence exports” a year and it wanted the value of those exports to increase significantly.

Its new “defence export strategy” will provide $3.8bn to local companies, administered by the Export Finance and Insurance Corporation (Efic), that need help selling their defence equipment overseas.

It will set up a new Defence Export Office to work hand in hand with Austrade and the Centre for Defence Industry Capability to coordinate the commonwealth’s whole-of-government export efforts and provide a focal point for more arms exports.

It has identified a number of “priority markets” to sell more arms and weapons systems: the Middle East, the Indo-Pacific region, Europe, the United States, the United Kingdom, Canada and New Zealand.

“It is an ambitious, positive plan to boost Australian industry, increase investment, and create more jobs for Australian businesses,” the prime minister, Malcolm Turnbull, said.

Not-for-profit organisations are dismayed with the plan, with Tim Costello, the World Vision Australia chief advocate, saying the decision to become a major weapons manufacturer sends a shocking message about Australian values.

But Labor said it supported defence industry manufacturing jobs and the best way to ensure the industry’s strength was by expanding its export capacity.

“Labor has long supported an Australian defence industry and we’ve long been strong supporters of an Australian defence industry that has, at its heart, the capacity to export,” the shadow defence minister, Richard Marles, said.

“We understand the sovereign capability which comes from having an Australian defence industry that supports the Australian defence force. So we see defence industry in terms of Australia’s broader security policy.”

Shadow defence minister Richard Marles with Bill Shorten. The ALP said it supports defence industry manufacturing jobs. Photograph: Mike Bowers/The Guardian

However, Marles said the government was playing catchup after trashing the defence manufacturing industry for years.

“It was Labor which first committed to the build of 12 submarines and building them here in Australia,” he said. “It was one of the many defence ministers of this government which famously said of the Australian defence industry that it could not build a canoe, and since coming to power under the Coalition we’ve seen thousands of jobs lost – particularly in the surface ship-building sector.

“Critical procurement projects such as the Australian supply ship being sent to Spain to help their defence industry, not doing a lot to build sovereign capability or jobs here in Australia.”

Richard Di Natale, the Greens leader, said Labor was trying to have it both ways.

“The Labor party needs to call this out,” he said. “If Bill Shorten is truly committed to peace in the region, if he’s truly committed to clean energy technology, to health and education services, then [he should say] that the billions this government promises to waste on exporting this technology to the rest of the world needs to be spent on things that really matter.”

Peter Whish-Wilson, the Greens defence spokesman, said if weapons manufacturers were unable to secure funding from private banks, and instead had to source finance from the Efic, then there was probably a reason for it.

“Make no mistake, if a company can’t get finance to sell to a foreign power then it’s highly likely that that country has a history of human rights abuses and that no bank on the planet would risk their reputation by issuing them a loan,” he said.

Labor did not criticise the government for using Efic to provide loans to local arms manufacturers.

On Sunday, the deputy prime minister, Barnaby Joyce, said he agreed with the assessment of the United States defence secretary, Jim Mattis, that China and Russia posed a far greater threat to the US than Islamist terrorism.

That prompted Turnbull on Monday to try to hose down his comments, saying terrorism was still Australia’s major security threat.