Pearls and Irritations

We can all be grateful that the acting auditor general Rona Mellor has decided to take at least a sideways glance into Commonwealth speculation, alongside a similar bet by the probably outgoing Queensland government, in an American horse in the great quantum computing race. I know nothing to say that there is anything intrinsically dodgy about the “investment,” and it is probably by now a fait accompli. But there are ample warning signs that a lot of bad government thinking is involved, and every prospect that Albanese’s foolish “picking winners” strategy will produce any number of similar fresh “initiatives” as we approach the next election.

Mellor has not, strictly, committed herself to much. The opposition science spokesman, Paul Fletcher asked her to look at the Federal Government’s $470 million investment in an American company researching quantum computing, as part of its jobs in Australia program. She replied on Monday that she had decided to add a potential audit of the Federal Government’s use of investment vehicles to her office’s work plan for the year. This audit, if commenced, may include the Australian Government’s investment in PsiQuantum.

Not much of a commitment, but I suspect that she will find it impossible to resist, especially given that there may be up to 10 more such projects on the way. Each has the potential to go wrong, and setting some standards now may prevent much waste, and even more gnashing of teeth in the future.

PsiQuantum, presently based in Silicon Valley, is engaged, with many other research organisations, in the race to design and develop the first quantum computer. It is still, pretty much, virgin territory. Whichever research operation is first to develop working quantum systems will make trillions, and the treasure hunt now involves scores of high-power research units, as well as the brains of some of the best nuclear and computer scientists, and physics experts all over the world.

PsiQuantum is already well-regarded among its peers for some breakthroughs in a potential path to the treasure. But there are lots of potential paths. Others in the race are following different paths, and no one knows who will win. As likely as not, we will not know before the first American nuclear-powered sub misses its delivery deadline. And even then, there may well be decades of further development before the first workable models are in the marketplace.

I wish PsiQuantum well, especially because it has some of our taxpayers’ money riding on it. But it is a roughie, and nothing that the Australian Government (or the Queensland Government) can do is likely to make any difference about its chances of winning.

What these governments can do, however, is to provide an Australian base for some of the research, and smoothed pathways into Australian scientific research establishments and universities for research focused on the path PsiQuantum is following. This will get them involved in cutting edge research, and in a position to develop from, so that Australia, and our institutions are very much partners in the enterprise.

I bet we will have nuclear submarines delivered before a result in the Quantum race. Not soon, possibly not ever, in short

That may be so even if the PsiQuantum path proves not to be the ultimate winner of the big race, which may be after the entire modern research generation has died. Or never, because there is no guarantee that anyone will win: the theory of it all may simply be beyond the present us.

If the bet pays off, Australia may have a front row position in further developing and exploiting the technology. This may prove to be a boon to 21^st century industry for Australia. Those controlling the technology will not only be able to build and sell quantum computers, but, no doubt, build some of the machines which exploit the technology, so as to become instant world leaders in fields such as cryptology, meteorology, and genomics. The prizes for the winner are incalculable – and all Australians will bless the far-sightedness of a political party and brave Australian prime minister who, decades before, decided to invest in a modern Australian future.

Of course, the horse could lose the race, and, down the track as it were, our actual investment could be worth nothing. But even then, we would not be in the ordinary position of the venture capitalist who has spread her bets in the hope and expectation that at least some of the gambles will pay off.

Writing off the failures is the end, for her. Government may not necessarily lose everything. The very act of getting involved as a government includes being in a position to shape the environment in which scientific research occurs. That can have helped create a research industry, built up research knowledge of continuing value and set up a highly specialised establishment well able to compete in the new scientific world. That Australian institutions themselves hope quantum computer physics (whoever develops it) will revolutionise their work probably means that researching with PsiQuantum will keep them on the leading edge of discussions about how breakthrough technology is exploited.

The bold brave plan is only one of a number of projects in which the Albanese Government plans to invest. Focused at creating jobs in the new economy. Focused at smoothing the way for the massive restructuring of the economy, of society and world finances that can be expected to occur around the world during this century. It’s about facing change. It’s about, inter alia, dealing with the blows of climate change, new energy systems, and pressures on water and agriculture. Albanese wants a future able to be made in Australia.

The traditional wisdom has been that politicians and governments are not the ones best equipped to predict which investments (or speculations) will produce winners. It may have something to do with the fact that it is not their own money that is at stake, but ours. One does not have to look past Australia to look for examples of brave and bold politicians who have invested in schemes honestly devised to promote jobs, create education hubs, establish new industries and so on.

The overwhelming proportion of such projects have come a gutser, as any number of students of the Royal Commissions into state disasters, whether in Victoria, South Australia, West Australia, Tasmania, Queensland or NSW can attest. Sometimes, but only sometimes, fraud was involved. More likely that it was not from the politicians per se, but the host of smarties, spivs, fixers, firefighters and urgers who saw the politicians coming from a thousand metres away. All the better if they were ideologues with some idee fixe about the inevitable public benefits of privatisation, or the need for public ownership of all key resources and means of production – and some art and artifice in extracting a cut for themselves along the way. The very fact that politicians and bureaucrats lack the experience and expertise to see the wide boys, to recognise early that the accumulation of “teething problems”, cost blowouts and changing economic circumstances was turning an investment into a dud.

Big Idea projects usually end in political disaster

The list of Big Ideas and Investments for the Future is not confined to nation-building projects such as those Albanese has been talking about recently. They can involve local beggar-my-neighbour schemes such as plans to “steal” the rights to a event, such as a grand prix or a Taylor Swift concert, from another state, and the regular auction by which mega companies announce they are building a new headquarters with X employees and are as yet undecided about which state to base it in.

States come crawling with packages, often involving free land, tax holidays, long-term tax concessions (giving away the predicted revenue in advance) and other privileges for the right. There will often be additional undisclosed (and unpredicted) costs such as building fresh traffic infrastructure or dealing with new pollution loads.

Or, as the ACT Government has recently purported to “discover” in relation to a new stadium on-costs such as roadworks, parking arrangements, and compensation, never before publicly estimated as a part of making a project happen. In much the same way the Victorian government purported to find a massive cost blow-out once it became politically inconvenient to proceed with plans for staging the Commonwealth Games in that state.

For the ACT, the cost of a new stadium, wherever located, has not blown out by anything like the sums indicated, nor can that extra cost properly be claimed to be the “cost” of having delayed building at some earlier time. When governments are trying to sell a project, they will reduce to a minimum on-costs that were already obviously necessary. They will not mention the roadworks, parking provisions, or the project management, and, probably, even the costs of fitting out the private boxes soon to be sold to people spending other people’s money. But if the mood changes, they will all be introduced into the equation.

In the same manner, it is of the essence of dishonest government that they will refuse to disclose many of the costs because they are said to be “commercial in confidence”. Disclosing the figure might compromise the government’s bargaining position during negotiations about the price, as if the tenderer, in whatever business, lacks the expertise to know going prices (or how much can be conned from a naïve and incompetent government).

It is even more galling to see such claims made by agencies such as the defence department, in respect of new technology, at times when senior officials of the supplying body were yesterday on the payroll of the defence department, working shamelessly for the other side, often for another country. I am amazed that review tribunals sometimes adopt the self-serving arguments advanced in such matters, but they never get discouragement from the Albanese Government, now more wedded to secrecy, if this is possible, than the predecessor Morrison and Turnbull Governments.

With the PsiQuantum deal, it appears, that PsiQuantum approached the government nearly two years ago with an unsolicited request for a deal. I guess they made a similar approach to the Queensland Labor Government, since minders in that administration soon had confidential details of the pitch that they are unlikely to have got directly from Commonwealth bureaucrats.

According to Ed Husic, minister for industry and science, his department then began a detailed analysis of the offer. A small number of other companies were invited into an expression of interest process, required to sign confidentiality agreements. Paul Fletcher, opposition spokesman on science, suggests that some of those in this process thought that the specifications for this in-house auction were drawn up so that only PsiQuantum could have met them. I shouldn’t be surprised, because departments eager to please usually establish processes which tend to produce the result that the minister, or the prime minister want. Though I would tartly add that it would take a cabinet minister from out of the Morrison Government to be able to spot immediately anything in the nature of a rort, an imposition on the public purse, or something designed for purely partisan purposes.

Heaven for Labor lobbyists is hell for taxpayers

The desirability of a casual look over from the auditor-general does not depend on a political fix or stitch up. One cannot help noticing, for example, that the project deal was announced in Queensland in a joint announcement by Albanese and the newish premier of Queensland, soon to face his electors in an election he may well lose. The timing of the announcement — perhaps the fact of any announcement at all — bears all of the hallmarks of something drawn out of the hat by federal Labor to help out a state party in trouble. That it involves $500 million of Commonwealth taxpayer funds, and a similar amount of Queensland taxpayer funds is neither here nor there for ministers, of either state, when spending other people’s money. No wonder that the other side of politics is outraged, since it was the party which had increased — as it happens by about a quantum — the going price of attempts to influence selected voters by such largesse.

And it is no surprise that there is already a large number of Labor remoras attached to the PsiQuantum shark. Australian lobbyists, Labor tree people, originally from both the Queensland and Commonwealth minder class have been all over the business in blowing into the ears of ministerial mates and minders and in using their privileged access and status to organise meetings and get access to bureaucrats. On the evidence so far, this could be a lucrative job-creating industry rivalling that of paying retired Australian defence officers to tick off American and British demands for money on submarines. My guess is that millions have already gone to the lobbyists who introduced PsiQuantum to ministers and officials.

There is nothing necessarily wrong with this – that is what lobbyists are for. But the fact that the background of the lobbyists involved is political rather than professional suggests that it is with access and ministerial ears that they mostly deal. If there were to be a public inquiry, the first question I would ask of each of the lobbyists, under compulsion, is what the contract said and what the success fee was. In strict theory, such fees would come from PsiQuantum, but we all know that in the end these are paid by the party with the chequebook.

Us. The size of the reward says something of itself.

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