An Australian think tank has criticised the decision by the Commonwealth and Queensland governments to commit almost $1 billion (US$653 million) to a start-up company developing a quantum computer.
The business was singled out by Treasurer Jim Chalmers in his pre-Budget address to the Lowy Institute yesterday to highlight the federal government investment strategy under the Future Made in Australia Act.
First, it would need to be operating in an industry in which Australia can be competitive and more productive.
Next, it needs to contribute to “an orderly path” to net zero, build the capabilities of people, and improve Australia’s national security and economic resilience.
Finally, it would need to recognise “the key role of the private sector” while delivering “genuine value for money for government.”
Quantum computing was a “critical technology”, he claimed, and was “essential here.”
“The announcement made by the Prime Minister and Ed Husic in Brisbane ... means this is a chance that won’t pass us by as we work in partnership with PsiQuantum to build a quantum computer in my home state of Queensland, and to initiate the next wave of innovation in our economy. This is one example of substantial public investment,” the Treasurer said.
However, the substantial public investment has drawn the ire of the Australian Institute for Progress (AIP), a Queensland-based think tank.
“Good luck to PsiQuantum if they can shake down a sovereign government for risk capital that private investors won’t put up, just as long as they shake down someone else’s government,” said the Institute’s Executive Director Graham Young.
‘The dream of quantum computing is approximately 40 years old, but functional computers are barely seven years old, and none of them is commercial so this is a high-risk speculative area where most startups will fail.”
PsiQuantum produces quantum-capable chips but does not appear to have produced a computer and so is behind competitors that have done so, such as Google and IBM.
“[Those two companies] can both overpower the Australian government when it comes to financial resources,” Mr. Young said.
“Google has a market capitalisation of US$2.05 trillion, while the Australian government’s net worth is negative US$465 billion, which means, in effect, that every dollar put into PsiQuantum is borrowed.
“Australia can’t afford to lose a billion on a speculative investment.”
PsiQuantum has already received funding from the United States government via the Defense Advanced Research Projects Agency (DARPA) and the Department of Energy.
“I doubt whether DARPA is investing in an offshore facility for the defence of the United States,” Mr. Young said.
“So you can bet there will be a rival [to the Australian facility] built on the U.S. mainland.”
While there are some commercial co-investors like BlackRock, they have funds under management of US$10 trillion, which Mr. Young said was “about the value of Australia’s entire household wealth.”
“They will be spreading their risk over a number of companies. Instead, the Australian government has put our meagre savings all on one number,” he said.
“BlackRock’s strategy will also probably be to cash out after a successful stock exchange listing, a strategy not likely to be taken by the government.”
Given the level of U.S. investment, he questioned the rationale behind the Australian government jumping in with both feet and committing a billion dollars.
While the government tried to portray giving PsiQuantum $940 million as investing in an industry, it effectively was investing in a single start-up company.
“It is one thing for a country to target the bio-medical industry, as Australia has successfully done, but an entirely different thing for it to put its money into a particular entrepreneurial enterprise,” he said.
“Last time the PM was in Queensland to spruik companies of the future it was to support Tritium, a Queensland start-up with substantial private support that went into administration last week because it could not compete on the international stage.”
Before it went into administration, Tritium had relocated its operations almost entirely to the U.S., citing Australia’s challenging conditions for running internationally competitive technology industries.
“I would have thought he might have learned a lesson from that,” he said.
Mr. Young emphasised that there was no guarantee that the promised jobs would eventuate for Australians, nor assurances that the computer would remain in the country.
Even if it did, it was open to being replicated overseas and foreign clients accessing the computer remotely.
“In reality, their direct interference in the economy is raising costs and lowering efficiencies and making Australia the last place that sensible capital would want to invest,” Mr. Young said.
