The Australian and Queensland governments’ $1 billion investment in PsiQuantum is not yet a done deal, with parties still to sign a final agreement a month after the unprecedented taxpayer-funded support package was announced.
Finance department officials on Thursday revealed that contracts had not been signed and confirmed speculation that the federal government’s approach to market for a fault tolerant quantum computer last year came after an unsolicited proposal from PsiQuantum.
Each government has committed $466.4 million to have the Californian startup founded by Australians build a commercial quantum computer in Brisbane under the Albanese government’s Future Made in Australia industrial program.
Shadow science minister Paul Fletcher said the admission that no deal had been signed was an “astonishing revelation” given how loudly the government had trumpeted the PsiQuantum investment, and was “yet further evidence of how badly this whole process has been managed”.
“This deal has been cloaked in secrecy – and it now seems that a critical fact which has been kept secret is that there is as yet no legally binding deal at all,” Mr Fletcher told InnovationAus.com.
“Labor must urgently come clean with Australian taxpayers. How much has been committed, what is the taxpayer getting in return, and if there is not yet a binding contract, what if anything is there?”
The investment reportedly made PsiQuantum one of the highest funded quantum companies in the world. It followed a secretive and limited expression of interest process and the involvement of lobbyists and consultants.
The federal Department of Industry, Science and Resources (DISR), which led the investment, has said it considered the technology of 21 firms as possible targets for investment in a competitive process that included several local quantum companies. But the government has faced accusations its process was tilted in favour of the US firm’s approach.
The government has declined to name the 20 other quantum companies it considered for investment, or to detail how these companies were assessed.
Federal and state ministers met multiple times with PsiQuantum between April 2022 and the EoI being issued in August last year. The firm engaged Labor-aligned lobbyists as the deal was put in place.
At Senate estimates on Thursday, officials from the federal Department of Finance said the PsiQuantum had approached Austrade for potential support before the government went to market last year, but rejected suggestions the selection of PsiQuantum was fait accompli.
“Having had an approach, then… the Commonwealth needed to do the work to understand whether this was something worth pursuing with,” Finance deputy secretary Richard Windeyer told estimates on Thursday evening.
“And that included DISR undertaking this confidential expression of interest process. So that was very important to understand before reaching a conclusion on whether or not to proceed with an investment with respect to PsiQuantum.”
The terms of the eventual deal with PsiQuantum, which includes loans, equity and some grant funding, have been kept secret by the governments over commercial sensitivities.
Officials on Thursday said this was because the final contract is yet to be “inked”.
“It’s not quite there yet,” one official said.
Finance minister Katy Gallagher said there were no concerns about the deal falling over and it is going through the “standard process you would [go through] to close out a deal of this type”.
Budget papers from earlier this month show the federal government’s loan will be through Export Finance Australia and is at least $200 million.
The debt portion is linked to milestones, officials said on Thursday, while intellectual property has also been “heavily negotiated”.
Export Finance Australia will publish the terms like interest rates and the split of debt and equity after the deal with PsiQuantum is signed, according to officials.
The federal government’s investment was led by DISR. It also involved Finance, Foreign Affairs, Treasury, the Office of National Intelligence and the Department of Prime Minister and Cabinet.
Finance became involved in June 2023. Its role was limited to advice on governance for commercial aspects of the deal, but did not extend to due diligence on PsiQuantum or any assessments of alternatives to the US firm.
Private advisers such as Deloitte and the Boston Consulting Group were used by the Industry department and its state counterparts to conduct due diligence on PsiQuantum.
Private consultants also provided economic impact analysis that found spillover benefits, in addition to the 400 local employees PsiQuantum says it will now add.
The federal government’s technical assessment was led by chief scientist Cathy Foley, who said PsiQuantum was a “country mile” ahead of other candidates.
The committee of eminent science and business leaders set up by the Albanese government to advise on quantum technologies was not consulted on the deal.
Industry minister Ed Husic has defended the investment, insisting it includes methodical technical, legal, commercial and probity assessments.
Minister Husic, whose office did not respond when approached on Friday, has previously said a grant aspect also exists but is only a small portion of the deal.
Officials from the Industry department will front estimates on Wednesday and Thursday and are expected to face further questions on the deal, including PsiQuantum’s investment in the venture and whether the deal includes any type of off ramps if the technology fails.
