Australia said yesterday its purchase of 12 F-35 Joint Strike Fighter (JSF) jets would be delayed by two years to save money in an aggressive drive to return the budget to surplus.
The move is a blow to defense contractor Lockheed Martin, which has struggled to keep costs under control, with each plane’s price tag doubling in real terms over the past decade.
The government announces its budget next week and the delay on delivery will provide a A$1.6 billion (US$1.64 billion) boost to the bottom line.
Australian Minister of Defence Stephen Smith said he spoke to US Secretary of Defense Leon Panetta yesterday morning and assured him the decision would not affect the US-Australia alliance.
“That effectively mirrors the decision which Secretary of State [sic] Panetta made with respect to over 150 Joint Strike Fighters proposed to be ordered by the United States,” Smith told reporters. “We are now essentially on the same timetable for the delivery of our first batch of joint strike fighters as the United States is.”
Australia is contractually obliged to purchase two JSF jets, which have already been delivered in the US for testing and training.
Further cost savings will be made with the cancellation of a project to acquire self-propelled howitzers, Smith said.
However, the government said it would push ahead with the acquisition of 12 advanced new submarines to replace the navy’s aging Collins fleet.
It announced A$214 million in funding toward detailed design and analysis for the future project.
“This will be the largest defense capability project the commonwealth has embarked upon,” Smith said.
Reports said that overall the submarine project was expected to cost about A$40 billion.
In announcing the decisions, Australian Prime Minister Julia Gillard guaranteed that overseas defense operations would not be impacted by spending cuts in the May 8 budget and there would be no reduction in military numbers.
“The budget will protect the men and women on the front line,” she said.
Mining-powered Australia was the only advanced economy to weather the global downturn without entering recession, and returning the budget into the black is seen as another key test of the struggling government’s economic management.