Ed Husic in spotlight over PsiQuantum ‘head start’ note

The Coalition has escalated its attack on a $1bn investment in US-based tech company PsiQuantum, given new documents show it had an eight-month head start on its competition.

Industry and Science Minister Ed Husic. Picture: NewsWire / Martin Ollman

New documents show Industry Minister Ed Husic commissioned an assessment of an “unsolicited proposal” from US-based tech company PsiQuantum to build a world-first computer in Brisbane in December 2022 – eight months before the government tested the market.

A briefing note for Mr Husic’s visit to the Palo Alto headquarters of PsiQuantum in January 2023, obtained under Freedom of Information laws, reveals the minister had agreed on December 19, 2022 to a “further analysis” of the proposal being promoted by the frontier technology company.

This was a full 8½ months before the Department of Industry, Science and Resources undertook a confidential Expression of Interest process in August-September 2023, which was released to 21 domestic and international quantum computing companies.

The new documents show that by the time of Mr Husic’s January 26 visit, the department had already started working with the Queensland Treasury and “relevant federal agencies” to assess the PsiQuantum proposal – including seeking advice from the national intelligence community.

Technical assessments were being undertaken by Chief Scientist Cathy Foley, while the Defence Department was running a separate assessment process.

Plans were also in place for PsiQuantum’s proposal to be subject to due diligence and economic analysis, with Deloitte deemed “likely” to be engaged. Separately, a “whole-of-government working group” had been tasked with examining the proposal.

The briefing note was obtained under FOI laws by Coalition science spokesman Paul Fletcher, who said it showed PsiQuantum was given special treatment. He told The Australian it exposed as “laughable” the government’s claims that a proper competitive process was conducted before the allocation of nearly $1bn of public money.

Anthony Albanese announced on April 30 the federal and Queensland governments would invest nearly $1bn in PsiQuantum to build a world-first quantum computer in Brisbane as part of Labor’s flagship Future Made in Australia program.

This would include a joint commonwealth-Queensland commitment of about $470m in equity and loans from each government, with the Prime Minister touting the creation of 400 highly skilled local jobs as a result.

However, the announcement was heavily criticised, with some industry sources arguing the EOI process was designed to favour PsiQuantum.

“This was a captain’s pick from the get-go and Australians have been treated like fools,” Mr Fletcher said. “We now know directly … the federal Labor government was in discussions around an unsolicited proposal from PsiQuantum as early as December 2022, in collaboration with the Queensland Labor government.

“This deal has been cloaked in secrecy from the beginning and now we know why – Ed Husic and Labor were obviously wooed by PsiQuantum and took it upon themselves to commit a large sum of taxpayers’ money, establishing a sham expression of interest process many months later to try and cover their tracks.”

The partially redacted briefing note marked “sensitive” showed that on January 26, 2023, Mr Husic toured PsiQuantum headquarters in California, accompanied by a deputy secretary of his department, Duncan McIntyre, and two Austrade officials, Tony Davis and Odette Hampton.

They met with the PsiQuantum executive management team, conducted an onsite lab tour and received a “presentation of PsiQuantum’s product site infrastructure in Australia”.

The note stated “on 19 December 2022, you agreed to further analysis (Stage 2) of PsiQuantum’s unsolicited proposal”.

“This will include formal due diligence and economic analysis; further independent technical assessments; and engagement with the national intelligence community,” it said. “The department is working closely with PsiQuantum, Queensland Treasury and relevant federal agencies on the assessment.”

The briefing note said the department and Queensland Treasury intended to co-fund a “due diligence and economic analysis” for which Deloitte was “likely to be engaged”.

“The department is working closely with Dr Foley, Australia’s Chief Scientist, on independent technical assessments, including scope and questions to pose,” it said. “PsiQuantum have updated several academics who can contribute to this process. The Department of Defence will run a separate assessment.

“The Australian government will consider any potential funding for the proposed PsiQuantum investment once the assessment is complete, funding options have been fully canvassed and relevant government processes undertaken.”

A spokesman for Mr Husic told The Australian Mr Fletcher was “in no position to lecture anyone with his confected outrage”.

“As a minister, he said it was ‘perfectly sensible’ to spend $30m on land worth $3m in a deal the audit office said didn’t meet appropriate standards of due diligence and fell short of ethical standards,” he said. “By contrast, our investment in PsiQuantum was subject to rigorous and comprehensive due diligence across several areas including commercial, economic, legal, technical, probity, and national security.”

At a June 5 Senate estimates hearing, DISR Deputy Secretary Helen Wilson made clear that PsiQuantum was “not invited to participate” in the EOI process because the department had established a separate due diligence assessment for it.