PsiQuantum deal under microscope: Senate estimates raise more concerns
A Senate estimates hearing has intensified scrutiny over the $1 billion PsiQuantum investment, questioning the government’s due diligence process.
This week, fresh questions were raised in Senate estimates hearings about the Albanese government’s investment in PsiQuantum. As Minister for Industry and Science Ed Husic visits the company’s US headquarters this week, scrutiny has intensified around the due diligence conducted by the Australian government in the lead-up to the investment announcement.
The PsiQuantum investment was announced ahead of the federal budget back in May. This was a dual financial commitment with the Queensland government and part of the deal included the establishment of its regional headquarters in Brisbane.
The federal government’s portion of the investment fell under the 2023-2024 federal budget, which allocated $101.2 million towards advancing Australia’s capabilities in quantum technology and AI.
Despite the fact that this investment was the only significant tech project the Department of Industry, Science and Resources (DISR) could point to under the government’s new Future Made in Australia scheme, questions have been raised around the PsiQuantum pick.
While the government has been spruiking the alleged importance of Australian businesses and startups in the tech space — PsiQuantum is actually a Silicon Valley company.
The closest we come to it being Australian is its co-founder and CEO Jeremy O’Brien. What it has been is successful. Since launching it has seen multiple successful funding rounds, including $611 million in Series D in 2021.
Homegrown quantum startups are also on the rise — some of which have received significant investment over the past year. This included $25.7 million for Quantum Brilliance and $50 million for Silicon Quantum Computing.
So the government choosing to engage a US company instead has raised eyebrows. But that’s just the beginning of the controversies surrounding the deal.
Controversies and due diligence concerns
The PsiQuantum deal has faced repeated scrutiny, well before it was even official, with reports suggesting that the company received preferential treatment during what has been labelled a secretive investment process.
It has also since come out that the National Quantum Advisory Committee (NQAC) wasn’t consulted on the PsiQuantum investment.
A government task force reportedly engaged in due diligence with PsiQuantum months before inviting 21 other quantum firms to a secretive Expression of Interest (EOI) process.
However, the government has also refused to release information regarding the EOI under the Freedom of Information Act to InnovationAus, which had been reporting on the PsiQuantum deal months before it was officially announced.
According to the publication, the government has cited national security, commercial confidence and public interest as reasons for the refusal.
The formal EOI process, which ran from August to September last year, invited 21 domestic and international firms to submit proposals.
However, it was revealed that PsiQuantum had been in detailed discussions with the government long before this period, leading to accusations of a biased selection process.
The Australian also reported that a $282,300 contract with law firm King & Wood Mallesons blew out to $3.3 million, with nine contract variations appearing on AusTender.
Senate estimate probing into PsiQuantum deal
During Senate estimates on Wednesday, secretary of the Department of Industry, Science and Resources Meghan Quinn faced tough questions about the due diligence process and the quiet departure of Duncan McIntyre, the former deputy secretary responsible for the task force overseeing the deal.
Quinn asserted that his departure was unrelated to the PsiQuantum deal or his alleged criticism of the selection process. She also defended the due diligence process, saying it followed a methodical approach with expert advice.
Technology investment task force leader, Anthony McGregor, confirmed that initial due diligence on PsiQuantum had started early, fuelling allegations that PsiQuantum received preferential treatment.
According to The Australian, lobbyists and consultants linked to Labor were hired by PsiQuantum in May 2023 to help get the deal over the line.
Shadow Minister for Science, Paul Fletcher, said the Albanese government had “consistently sought to conceal the truth” regarding the PsiQuantum investment.
In response to allegations that government officials who opposed the PsiQuantum deal process were frozen out of the process, Minister Fletcher said “The Coalition will be investigating these suggestions – because if true they would be very concerning”.
Given the continued controversy around the PsiQuantum deal, and the fact that its yet to be signed, there is now speculation that it may not go ahead.
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