The Joint Strike Fighter has been beset with problems.

The Joint Strike Fighter has been beset with problems.

ON SETTING up a National Commission of Audit in October, the government made much of the terms of reference that specified the commission would scrutinise all areas of Commonwealth expenditure.

Chairman of the commission Tony Shepherd has backed this up, telling a Senate Select Committee last month that every expenditure measure was on the table.

His commission would not be restrained by the government's pre-election commitment to maintain expenditure on such things as health and education.

The commission's interim report is due on February 14, but we may not find out how true Shepherd is to his word until his full report is delivered at the end of March.

A key indicator of whether everything really is on the table will come when we find out how the commission tackles defence spending, and in particular the Joint Strike Fighter, the second most expensive defence outlay in Australia's history.

The decision to buy 14 JSFs at a cost of $3.2 billion was announced in November 2009 by the previous Labor government. This was to be the first batch of an overall purchase of 100 aircraft, but Labor later cut the number to 72.

Even when announced, the purchase was debatable. But since that time the project has been plagued with problems.

Last week a leaked report by the Pentagon's chief weapons tester, Michael Gilmore, confirmed the unacceptable performance of the plane's software. The report, obtained by Reuters, said the aircraft was proving less reliable and harder to maintain than expected, and the aircraft's increased use of electrical systems made it vulnerable to lightning and missile strikes.

The software still had deficiencies in a range of areas, including radar, electronic warfare and navigation, and its electro-optical target and helmet-mounted systems.

The report forecast a possible 13-month delay in completing tests of the software needed for the US Marine Corps to clear the jets for initial combat use next year.

Australia's current defence budget is $25.4 billion, about 1.5 per cent of GDP. Prime Minister Tony Abbott has committed the Coalition to increase this, within a decade, to 2 per cent of GDP, or by a massive $8.5 billion in today's dollars.

At the same time, the commission is being asked to work out how the government can cut expenditure to achieve a sustainable budget surplus of 1 per cent of GDP before 2023-24.

Obviously, if Defence was to get a greater share of the cake, and the government was to generate a surplus overall, other sectors of expenditure would have to accept a smaller share. In truth, we know these commitments are a con, just like the Coalition's pre-election promises to maintain all Labor's major expenditure measures, abolish two taxes and cut the deficit.

Undoubtedly the Shepherd commission will come up with some proposal to eliminate waste, including defence waste. Razor gangs always make such a finding, often coming up with a fictional amount of claimed savings. In reality, the only real savings come from cutting programs, and that requires political backbone.

The suspicion is that the commission is simply a stalking horse, set up to enable the government to dump its promises on health, welfare and education.

This view has gained credence because of the background of the commissioners. Shepherd is president of the Business Council of Australia and has advocated lifting the Goods and Services Tax rate; Dr Peter Boxall is a former head of the departments of Finance and Employment and Industrial Relations and is a well-known economic rationalist; Amanda Vanstone is a former Liberal senator and minister; less controversial are Tony Cole, a former Treasury secretary, and Robert Fisher, a former director-general of the Western Australian department of Industrial and Regional Development.

The dries in the Coalition have always found it easier to attack payments to the poor than cut defence spending.

In April 2012, now-Treasurer Joe Hockey adopted conservative United States Republican thinking when he called for an end to the age of entitlement in Australia.

He argued government spending on education, health, housing, subsidised transport, the social safety net and retirement benefits were at unsustainable levels.

Defence spending was conveniently left off the list.

One of the problems with major acquisitions such as the Joint Strike Fighter is that once we get on the treadmill, no government ever dares get off.

In 2006, the air force told us the fighters would cost about $100 million each. Today we are committed to buying 14 at a cost of $3.2 billion, or $229 million each.

But we are also on the slippery slope of intending to buy another 58. Despite assurances to the contrary, we can safely bet that in the way of all these purchases, the US dollar price will rise. The US government will not hold Lockheed Martin to a fixed price on the project. The technical problems which generate cost over-runs will simply be passed on to customers - the governments that buy the aircraft.

On top of that, the slide in the value of the Australian dollar will mean the purchase price will rise significantly.

Withdrawing from the buying consortium would not only contribute to lowering our budget deficit, it would considerably help our balance of payments.

If the Audit Commission was to seek justification for recommending cancellation of the project, it would not have to look far. Critics point out that due to its complexity and mismanagement, the aircraft is way behind schedule and the computer system shows no sign of being ready. The aircraft's test results have been poor and have exposed structural cracks. The JSF is not as "stealthy" as it should be and it is not sufficiently manoeuvrable.

Some even say the aircraft is already obsolete and we would be better off using drones to defend our shores rather than manned aircraft.