Australian Financial Review - Coalition claims ‘$1 billion captain’s pick’ as PsiQuantum answers emerge

The Albanese government signed a $2.1 million contract with Lazard’s bankers to help it negotiate with US-based PsiQuantum a month before it tested the market to see whether rival Australian companies could develop a quantum computer by 2030.

The Department of Industry, Science and Resources engaged six external service providers – including advisory firm Lazard Australia and law firm King & Wood Mallesons – in a due diligence process before committing in April to its $1 billion co-investment with the Queensland government in PsiQuantum, newly released documents show.

It has been claimed that PsiQuantum had a head start over local rivals, and that expression of interest (EOI) documents were sent to industry players in August last year, well after PsiQuantum began meeting government representatives.

Answers to questions taken on notice during a Senate estimates committee hearing in June show Lazard Australia was engaged to provide “commercial advice and negotiation support” from July 16, 2023, while KWM landed a $2.9 million contract to provide legal services from July 24.

Opposition science spokesman Paul Fletcher said the responses showed the government’s “most unorthodox and irregular decision” had failed “to meet the normal standards of contestability, fairness and probity” when taxpayer money was invested in a private business.

“These answers … provide yet more evidence that the Albanese Labor government made a captain’s pick to provide nearly a billion dollars of taxpayers’ money to American company PsiQuantum, and months later sought to cover its tracks by establishing an expression-of-interest process which was reverse engineered from the outset to support the decision it had already made,” Mr Fletcher said.

A spokesman for Industry Minister Ed Husic said the government “made no apologies for backing Australia’s economic future and ensuring our nation’s national security” through the PsiQuantum investment.

”Our investment was made following a rigorous, lengthy due diligence process involving comprehensive assessment across multiple areas, including legal, technical, financial and national security,” he said.

The responses show PsiQuantum first submitted a proposal to the department and the Queensland government in November 2022. The department said it spent the next seven months understanding the proposal and preparing advice for the government before establishing a technology investment taskforce in June 2023.

That month, non-binding discussions began with PsiQuantum, which had signed a non-disclosure agreement with the Commonwealth in March 2023. The department said when it decided to run the EOI process, no decision had been made to invest in any company.

Of the 21 companies invited to participate in the EOI process, five provided submissions that were assessed by multiple departments, including the technical advisory group, within 10 working days of submissions closing.

Negotiations with PsiQuantum on the long form contracts began in late February 2024, the department said.

The department also revealed the loan component of the deal was provided to PsiQuantum’s Australian subsidiary. The $189.5 million equity component was invested in the US parent company – with obligation that the money be pushed to the Australian arm to meet costs of building a fault-tolerant quantum computer in Brisbane.

PsiQuantum has said the Australian computer will be operational by the end of 2027 and has committed to building a quantum computer in Chicago the following year, after landing $US500 million ($764 million) in incentives.

A fault-tolerant quantum computer is defined as being able to perform quantum computation correctly despite the presence of noise, errors and other faults in the process.

Asked whether the technology – which is unproven – was unable to deliver the quantum computer, the department said its funding was tied to agreed technology and infrastructure milestones set by experts.

If the computer were to work, PsiQuantum will determine who uses it, but has committed to giving Australian researchers and companies access to the capability.

Author: Tess Bennett

This article appeared in The Australian Financial Review on 6 August 2024