Fighter planes: Australia 'already has' the $12.4bn to pay for stealth jets

The federal government says it already has the $12.4bn it needs to pay for the 58 American F-35 Joint Strike Fighters it has purchased and that the money will not come out of future budgets.

Prime minister Tony Abbott and defence minister David Johnston announced on Wednesday that the government would acquire 58 more of the F-35 jets by 2023, bringing the fleet to 72, with an option to purchase another 28 in the next few years.

The $12.4bn price tag makes it one of the biggest defence purchases in Australia’s history and includes maintenance, weapons and upgrading of facilities in Australia.

Concerns have been raised about buying the F-35, which has been plagued with cost blowouts, delays and software problems.

Abbott said the $12.4bn had already been put aside and the money would not be coming out of any future budgets.

“I want to stress that this is money that has been put aside by government over the past decade or so to ensure that this purchase can responsibly be made,” he told reporters in Canberra.

“The way we try to run government, and the way successive governments to their credit have tried to do these things, is you know that at some point in the future you're going to need new ships, new planes, new armoured vehicles etc, so you start putting the money aside now for the major purchases that you need in the future to keep your defence forces effective.”

Johnston said Australia would have the option to review its order if costs started to rise by too much, but the trend had been for the cost to come down.

“We have been putting the money away, in a line item called air combat capability, and it's been there, it's been building up and it's in the budget,” he said.

The planes will be built by Lockheed Martin in Texas and the price tag includes weapons, maintenance and the upgrading of facilities in Australia to house the aircraft.

“This is a system that can detect adversaries at quite a phenomenal distance and is stealthy so it is very, very difficult to find,” Johnston said.

The aircraft has sophisticated technical and software installations that have caused the price of the fighter to fluctuate as well as some development issues, which Johnston acknowledged, stopping short of saying the government could guarantee the price.

“It can float up over time but it is not binding on Australia, if we aren’t satisfied we can change the number we order,” he said.

“Clearly from time to time, from order to order, there will be pressure on manufacturers to maintain current direction of price, which is downward.”

The fighter has been developed by about half a dozen countries, including Canada and Denmark, which are considering not purchasing the fighters because of difficulties in cost and development. These issues have not deterred Japan, which has also made a sizeable purchase of the jets.

The founding editor of Defence Industry Daily in America, Joe Katzman, said the price of the jets had not come down as expected, partly because of a lack of demand in the domestic and export markets.

He said the price Australia ended up paying for the jets would depend on whether the contract gave responsibility for necessary changes to the jet to the manufacturer or the Australian government.

“The F-35 hasn't finished testing,” he said. “They're continuing to discover cracks. They're continuing to discover areas they need to fix. And if those costs are on the Australian government, then even a fixed-price contract doesn't tell you what you will pay for the planes because, of course, they're not fully done until you fix them.”

The RAAF is scheduled to take its first delivery of the F-35 in 2018 and it will begin service in 2020.

“This takes us to a fifth generation of fighter aircraft, obviously the region does not have a fifth-generation aircraft at the moment,” Johnston said. “We see this aircraft as providing everything Australia needs in terms of aircraft capability until about 2050.”

The F-35 Joint Strike Fighters will replace Australia’s F/A-18A/B Classic Hornets which are to be phased out by 2022.

Opposition leader Bill Shorten supports the purchase, saying the previous Labor government believed the F-35 was an appropriate addition.

“There had been some problems in terms of aspects of the aircraft but it appears that they have been ironed out, so Labor does think that the addition to our air force is the right way to go,” he said.

The Greens’ acting leader, Adam Bandt, called the jets “plagued” and said it was a questionable use of money is times of budget restraint. “Tony Abbott’s priority should be pensions, not poorly performing planes,” he said.

The RAAF bases at Williamtown in New South Wales and Tindal in the Northern Territory will get about $1.6bn in upgrades and new facilities so they can be the home bases for the squadrons.