Grilling looms over Labor’s secretive $940m bet on quantum computer firm
The departure of a senior bureaucrat who led due diligence on the $940m PsiQuantum deal heaps pressure on Ed Husic’s secretive agreement.
The sudden departure of a senior bureaucrat who led due diligence on the $940m PsiQuantum deal and a multimillion-dollar blowout on legal bills will heap more pressure on Industry and Science Minister Ed Husic’s secretive deal with a US-based tech firm.
Ahead of a grilling of Department of Industry officials in Senate estimates hearings on Wednesday, The Australian can reveal Mr Husic will visit PsiQuantum’s Silicon Valley base this week during a six-day trip to the US “showcasing a Future Made in Australia”.
While Mr Husic is abroad, Coalition and crossbench senators will probe his top mandarins about the government’s confidential, hand-picked expression of interest process that quantum industry figures claim was retrofitted in favour of PsiQuantum.
Sources close to industry and government told The Australian that officials who raised concerns about the PsiQuantum deal were frozen out of the process. One senior figure is understood to have privately compared controversial former US health company Theranos, which promised to revolutionise blood tests, with PsiQuantum’s ambition to build a yet-to-be-developed fault-tolerant quantum computer in Brisbane by the end of 2027. The Australian is not suggesting any link between Theranos and PsiQuantum.
Amid ongoing secrecy over the due diligence process, The Australian can reveal the department engaged law firm King & Wood Mallesons on a $282,300 contract in August last year – about the same time the department launched an invite-only EOI process involving PsiQuantum and 20 other domestic and international quantum firms. AusTender documents show nine contract variations up to May 28, with the contract value blowing out to almost $3.3m.
An Industry Department spokesman said KWM “were engaged to support legal due diligence … the contract was extended as each phase of due diligence increased in intensity and depth”.
“The government sought confidential independent advice and analysis as part of this process, including extensive commercial, legal and technical due diligence,” the spokesman said.
With Mr Husic under pressure to release more information about the EOI process, the Coalition on Wednesday will raise questions about the sudden departure of former Industry Department deputy secretary Duncan McIntyre.
Mr McIntyre, appointed in November 2022 with responsibilities for science and technology, is understood to have travelled to the US with Mr Husic to meet PsiQuantum in January last year. He was tasked with standing up a taskforce reviewing the PsiQuantum pitch, which sources said raised some risks about the proposal to build the world’s first fault-tolerant quantum computer.
Mr McIntyre, a public servant with experience in tech policy and procurement, has departed the department and is working as a first assistant secretary in the Department of Health and Aged Care.
While Mr Husic and the department did not respond to questions about Mr McIntyre, The Australian understands department secretary Meghan Quinn is responsible for staffing decisions.
Chief Scientist Cathy Foley – whose term Mr Husic extended for an unconventional 12 months last December – was initially sceptical about the PsiQuantum proposal across 2022 and 2023. The physicist and quantum pioneer, appointed by the Coalition to a three-year term from January 2021, is understood to have been keen to continue in the role.
After the PsiQuantum announcement, Dr Foley – technical adviser on the investment – said that after fearing PsiQuantum’s claims were “dodgy” in 2022, the government had been convinced over a two-year assessment. Dr Foley’s spokeswoman said: “Any connection between her term as Chief Scientist and approach to the PsiQuantum proposal is erroneous.”
While Jim Chalmers’ Treasury distanced itself from the funding decision, Finance Department officials said last week the PsiQuantum agreement was not yet finalised despite Mr Husic, Anthony Albanese and Queensland Premier Steven Miles announcing the deal on April 30. The Albanese and Miles governments have each pledged $470m supporting PsiQuantum’s quantum computer and to create up to 400 jobs. An additional $27.7m was allocated in the federal budget to “manage and provide oversight” of the PsiQuantum investment.
Finance officials said: “The high-level principles have been agreed on; the deal is about to reach commercial close … It’s been moving to the final execution phase, on satisfaction of the last conditions to actual signature.”
Amid expectations the Coalition will commit to axing the PsiQuantum funding, Deputy Opposition Leader Sussan Ley said the “Labor-PsiQuantum sweetheart deal gets murkier and murkier”. The Australian previously revealed that Labor-linked lobbyists and consultants were hired by PsiQuantum in May 2023 to help land the deal.
Ms Ley, who is opposition industry spokeswoman, said senior departmental officials needed to be able to give governments’ “frank and fearless advice”.
“We are also deeply concerned that an Industry Department contract for legal work has somehow blown out from $282,000 to almost $3.3m, with nine different variations to that contract since August last year,” Ms Ley said.
Mr Husic’s spokesman said: “Our investment in PsiQuantum will mean hundreds of jobs and billions of dollars of direct investment by PsiQuantum – investment that would otherwise have gone overseas. The investment was subject to rigorous and comprehensive due diligence across several areas, including legal, technical and national security.”
Opposition science spokesman Paul Fletcher said the government had “consistently sought to conceal the truth” about its deal with PsiQuantum.
Mr Fletcher said the Coalition would probe department officials on Wednesday about feedback provided to the government on the deal and whether public servants had been frozen out. “The Coalition will be investigating these suggestions – because if true they would be very concerning,” he said.
Mr Fletcher has written to Home Affairs Minister Clare O’Neil about whether the national security committee of cabinet deliberated on PsiQuantum funding and the level of advice and feedback from national security agencies.
After attending BIO2024 in San Diego, Mr Husic on Tuesday posted on social media: “Next stop, San Francisco for a day of visits including to some amazing Australian-founded tech companies Atlassian, PsiQuantum & Remedy Robotics”.
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