The Labor government of Prime Minister Kevin Rudd will buy three F-35 squadrons, around 70 aircraft, for operational duty beginning in 2017 as part of the country's $3.9 billion annual defense spending.

Development financing for the aircraft comes mostly from the United States. But the United Kingdom, which came on board as an official development partner in November 1995, paid 10 percent of the concept development. Ongoing development is also being paid by Italy, the Netherlands, Canada, Turkey, Norway, Denmark, Israel and Australia. Funding ranges from $2 billion from the United Kingdom to $125 million by Denmark and Norway.

The decision should finally end the controversy over whether to buy the much more costly F-22, already operational with the U.S. Air Force, the only air force to use it. The Joint Strike Fighter program's aim was to design and manufacture a common affordable lightweight fighter but with advanced strike technologies.

The 200-page Defense Capability Plan document also outlined 16 other major acquisitions expected in the next two years, including upgrades to its aging C-130 Hercules aircraft and artillery for the army.

The government announced it would now set out planning cycles of four years, running until 2013, and not the usual 10-year cycle. Defense Materiel Minister Greg Combet said the shift to shorter cycles means the government could set out more detailed acquisition plans. Local defense industry firms could then develop, produce and sell their materiel sooner to get a return on their investment more quickly.

Combet expects around 5,000 defense industry jobs to be created within the first four-year cycle to 2013. Electronic warfare, high-frequency radar and combat clothing are areas where the government will concentrate procurement.

In designated industries deemed essential for Australia to maintain control over its defense manufacturing base, tenders for all contracts over $39 million must show they have an Australian manufacturing or supply element. More details on this will be announced later in the year. Also, the government may help with funds for training and skills development within these industries to make them more competitive.

The defense capability plan can also be seen as final confirmation that Australia will not seek to buy the larger, faster but less electronically sophisticated F-22 Raptor, a Lockheed Martin and Boeing fighter aircraft that was introduced into service with the U.S. Air Force in late 2005. At a cost of nearing $200 million apiece, less than 145 have been built. But the low production figure, which reflects the high cost, is mainly because U.S. federal law prohibits foreign sales.

Nonetheless, some Australian politicians, notably the opposition Labor Party itself in 2006, were pressing the United States to relax the ban. So have senior defense personnel and some analysts, especially the pressure group Air Power Australia, which has heavily criticized the F-35's inferior performance, as they see it, versus that of the F-22. Israel has also shown interest, and so has Japanese Defense Minister Yasukazu Hamada as recently as last month.

U.S. Defense Secretary Robert Gates has said he has no objection to the sale of the F-22 to Australia, but Congress has shown no inclination to end the ban. In March an F-22 test plane crashed near Edwards Air Force Base in California, killing the Lockheed test pilot. Then in April, Gates proposed to Congress that production of the F-22 be phased out in 2011 after the final, 187th, aircraft is built.

The Lockheed Martin F-35 Lightning, with production at the firm's Fort Worth, Texas, facility, is a single-seat, single-engine multi-role fighter in three versions -- conventional take off and landing, short take off and vertical-landing, and carrier-based.

The first flight was at the end of 2006, and it is expected to be operational in 2011, costing around $85 million apiece at current estimates. The main engine is a Pratt & Whitney F135 with a joint General Electric and Rolls-Royce F136 engine as an alternative.

Armaments include an internally mounted GAU-22/A four-barrel 25mm cannon with 180 rounds, or 200 rounds if fitted externally. It can carry two externally mounted air-to-air missiles or air-to-ground weapons, of between 1,000 and 2,000 pound bombs. It will also be the first fixed-wing aircraft to be operational with the U.S. Air Force with Direct Voice Input, a voice recognition system from Adacel Systems and SRI International. The main radar system is the AN/APG-81 Active Electronically Scanned Array from Northrop Grumman Electronic Systems.

The U.S. government awarded contracts, one to Boeing and one to Lockheed Martin, to develop F-35 prototypes in 1996. A bid from McDonnell Douglas was rejected on the grounds that its initial design would be too complex and thereafter too costly, keeping in mind the affordable nature required of any new aircraft.

Lockheed Martin's X-35 prototype was chosen over Boeing's X-32, mainly because of the X-35's short take off and vertical landing capability. The X-35B version took off within 500 feet, also went supersonic and could land vertically, outperforming Boeing's prototype. The contract was officially handed to Lockheed Martin in October 2001.

Gates announced in April that the United States would buy 2,443 of the F-35 aircraft.

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