1. There are higher priorities to spend money on
2. The F-35 capability is more expensive than first calculated, adding more airframes drives that cost up
3. The overall fighter capability is more expensive than first considered, and is already arguing for a Hawk replacement (more money, see (1))
4. The F-35 offers little to the current force, especially in terms of homeland defence. Adding more does not move the needle at all.
5. A WA-based Sqn would add significant cost and complexity to the supply chain. It's hard enough sustaining Tindal from Williamtown; Perth would be much harder. You'll also have to buy a shedload of additional equipment for that - all the GSE and the like that is at Williamtown would need to be duplicated. See (1) again.
Not only are F-35 more expensive, capabilities and upgrades have taken longer and key features still aren't in, and blk IV is now more a spectrum rather than a single upgrade that provides all promises. We are still waiting on various anti-shipping, ECM/EW/ISR, networking etc. TBH some of those were pretty far off when promised. But given the dramas with the Blk IV upgrade and the fact that Australia was such a early adopter with a lot of airframes needing upgrades, I suspect the RAAF is pretty much fully booked.
There are also super hornet upgrades in the pipe to blk III. Which again, is another commitment for that platform, so I for see Australia flying that platform for much longer.
Drones, P8, E7 upgrades.. they seems to have a lot going on. 20 new hercs..
I'm increasingly disillusioned by the F-35 capability. Lockheed Martin promised the world, I'd like them to start delivering some of their promises. I realise that the F-35 has seen some success over Iran - I'll note that our stated enemy exceeds Iranian capabilities by orders of magnitude and are 1000s of km further away.
I think it will always be a problem child, never truely living up to its potential. That said, its still a very capable aircraft. Its still very impressive, and there is still progress being made, but those lockmart promise and timeframes seem pretty hollow now. So much so I'm not sure we will ever see some capabilities effectively realised.
If any fighters were to be procured, the F-18SH would but far, far more likely. The US is pretty desperate for orders if they want to keep it open, its a platform that could be gifted to other countries. Malaysia tried to buy those Arab hornets. Super hornet may be a better fit for them. We could co-locate at Butterworth. We could hand off some Blk II and get Blk III. Upgrading aircraft isn't cheap, and uses up considerable time, money, and resources. But who wants to put in a billion dollar order for 4th gen fighters right now? As you said, it would be billions, billions that desperately needs to be spent elsewhere.