InnovationAus.com - ‘Obsessive secrecy’ a red flag for $1bn quantum deal

Shadow science minister Paul Fletcher says the “obsessive levels of secrecy” applied to Australia’s billion-dollar investment in California-based startup PsiQuantum raises suspicions that the process was reverse-engineered to a pre-determined outcome.

Mr Fletcher, who is also Manager of Opposition Business in the House, says he will use all “appropriate parliamentary channels” to determine how the investment decision was made.

He has demanded that government make public all departmental advice, together with the business case and all other materials that were relied on to make the surprise investment decision.

The Prime Minister Anthony Albanese and Queensland Premier Steven Miles announced on Tuesday that the two governments would invest a combined $940 million into the US startup PsiQuantum, made up of a combination of equity and loans.

But the governments have not made public any details related to the investment, and have not disclosed whatever business case, economic impact study or technical assessments that were used to inform the decision.

Mr Fletcher said the secrecy surrounding the largest single investment either government has made into a startup was a warning flag for the Opposition and that the transaction needed more scrutiny.

He said the secrecy related to an Expression of Interest process conducted last year, and the confidentiality agreements that companies were forced to sign in order to participate meant that the process was neither open nor transparent.

“What we have seen raises real alarm bells about the process the government went through here,” Mr Fletcher told InnovationAus.com.

“It appears that some other companies were invited to participate in a process, but it was not a public process and they were required to sign non-disclosure agreements.

“This raises a suspicion that the process was reverse engineered to ensure that PsiQuantum would be the winner. It also raises questions about the role of the minister on the one hand and his department on the other,” he said.

“The departmental advice, together with the business case and other material relied upon by the Albanese Labor government prior to making this funding commitment of nearly a billion dollars must be publicly released to provide confidence [in] the process.”

Independent ACT senator David Pocock, who has made improving government procurement outcomes a genuine focus of his first term in office, said he had not been briefed on the circumstances of the PsiQuantum investment but had now been offered one.

Senator Pocock had used a vote in the senate to produce an Order for the Production of Documents related to the PsiQuantum and the EoI process – and government’s contact with the company and its lobbyists in the past year – with modest results.

What little documentation the federal government was able to produce in relation to its dealings with a company that would receive nearly a billion dollars in taxpayer money just a few weeks later was heavily redacted.

“This is a sizeable investment in Australia’s future technological capability for which we are yet to see the full scope and detail,” Senator Pocock said.

While welcoming strategies to grow domestic capability using co-investment, he said “it is also important to offer a fair opportunity for Australian companies to compete, especially for an investment of this scale.

“Multiple Australian-based quantum companies raised concerns about the process leading up to this announcement, as early as December last year. That’s why I sought the release of various documents related to this process,” Senator Pocock said.

“As the government further develops its Future Made in Australia policy and related legislation, the focus needs to be on how we define ‘Australian-made’, how we retain Australian funded and developed IP, and how we build sovereign SME capability.”

The Opposition’s Paul Fletcher said the public had a right to see what advice the government had been given to underpin such a large investment.

“The Albanese government has pursued to an almost obsessive degree of secrecy about this issue,” Mr Fletcher said.

“They have rejected multiple FoI requests for information in relation to this process, from me as well as from journalists. They have resisted providing information in response to the order for production of documents from the Senate.

“The whole process was closed in confidentiality, with participants required to sign non-disclosure agreements,” Mr Fletcher said. “This is the very opposite of an open, transparent, competitive process when you’re allocating government money.”

“And certainly, when you’re allocating almost a billion dollars of government money, taxpayers have a right. We would expect that the process would be open and transparent.”

The local quantum industry has been seriously concerned about the secret EoI process, and say the investment in PsiQuantum will damage Australian quantum companies.

Author: James Riley

This article appeared in the InnovationAus.com on 1 May 2024