By James Grubel
CANBERRA (Reuters) - Australia will delay orders for its first squadron of Lockheed Martin F-35 joint strike fighters to help with budget savings, the government said on Thursday, in the latest setback for the long-delayed and over-budget international project.
Defence Minister Stephen Smith said a decision on when to take delivery of the 12 stealth aircraft would be pushed back two years, putting Australia on the same timetable as the United States, which has also delayed initial purchases.
Australia has committed to two joint strike fighters to be delivered in 2014-15, but which will remain in the United States for testing and pilot training. It was due to decide later this year on the timing of the next 12 planes for use in Australia.
"We are now essentially on the same time timetable for delivery of our first batch of joint strike fighters as the United States," Smith told reporters, adding the delay would save Australia $1.6-$2.1 billion to help the government return its budget to surplus.
Australia is one of the eight international partners helping fund the development of the F-35, although constant delays and increased costs, as well as budget pressures, have prompted some countries to wind back or delay their orders.
The United States has delayed orders for 179 planes for five years to allow for more testing. The Netherlands has announced it will buy fewer than its planned 85 F-35 fighters. Italy has also cut its orders by 30 percent due to budget constraints.
The other F-35 partners are Britain, Norway, Turkey and Canada.
Australia has long-term plans to buy up to 100 F-35s for up to $16.4 billion but has made no commitment beyond the first 14 planes.
Smith has previously warned that any delays in the F-35 project could prompt Australia to buy more Boeing F/A-18 Super Hornets to fill any gap in capability.
Smith also said Australia would scrap plans to buy self-propelled artillery, saving around $225 million to help the government return a budget surplus by July 2013.
But he said Australia would spend more than $200 million to examine plans to buy 12 new submarines under a $36 billion submarine replacement program.
Australia last year asked three European companies, French naval builder DCNS, part owned by Thales, Germany's Howaldtswerke-Deutsche Werft GmbH and Spanish state shipbuilder Navantia, to submit designs for the submarines which it hopes will enter service by 2025.
The announcements came as Australia considers a wider review of its defence posture and strategic outlook, and as the country strengthens its military cooperation with its strongest military ally the United States.
The United States is in the process of positioning 2,500 marines in a de-facto U.S. base near the northern Australian city of Darwin, and will have more access for U.S. navy ships to visit Australia's Indian Ocean navy base near Perth.
Australian military planners have also recommended the government move more military assets to the nation's remote north west, and to have a more visible presence, to help protect multi-billion dollar mining and offshore oil and gas projects.
Smith said he had spoken to Defence Secretary Leon Panetta about the defence plans, and assured the U.S. that budget savings would have no impact on joint Australia-U.S. operations.
(Edited by Jacqueline Wong)