Budget 2024: It seems the federal government went dutch with Queensland on the $940 million PsiQuantum deal, but the really surprising part is a $28m fine print cost

We now know how much the federal government is spending to bring PsiQuantum, the California-based quantum computing company with Australian founders, to Brisbane. Well, almost.

The budget says $466.4 million in equity and loans from Export Finance Australia on the National Interest Account.

And it seems that a fair slab is a loan “estimated to exceed $200 million at 30 June 2024” but the actual figure is hidden as commercial-in-confidence – the first time a government’s been done that road.

It’s less than half of the $1 billion figure many in the media have attributed to the feds since the announcement last month.

But if that figure’s the true picture it also means Queensland taxpayers are all going to be bajillionaires if this quantum bet pays off. If the state government is tipping in circa $470m, that’s around $91 a taxpayer – enough to buy them all a maroon State of Origin jersey.

Alternatively, because the feds are being so secretive about this investment “due to commercial sensitivities” (it’s hard to know what the commercial sensitivity is – is another government competing with Australia to invest in PsiQuantum?), they’ve hidden more of the total in other buckets of yet-to-be-disclosed grant funds and a clearer picture of the total federal figure will emerge over time.

But there’s a detail in the budget papers that, excuse the acronym, has us going WTF?

Budget paper No. 2 says:

“Additional funding of $27.7 million over 11 years from 2023–24 will also be provided for the Department of Finance, the Department of Foreign Affairs and Trade, the Department of Industry, Science and Resources and the Department of the Treasury to manage and provide oversight of this investment.

“The financial implications of the financing package are not for publication (nfp) due to commercial sensitivities.”

So monitoring the investment in PsiQuantum is going to cost $2.52 million a year over more than a decade.

When the PsiQuantum touted 400 jobs being created by the investment, how many of them are bureaucrats standing around watching that investment being spent?

At average weekly earnings, you could employ around 25 people for 11 years to watch the other $466.4 million happen.

Or to put it another way, you could invest in 10 new startups annually through Blackbird-backed Startmate at pre-seed stage for a decade – more than 100 – if you really want to go cray cray on picking winners.

There was no new funding for quantum in the budget, but we can’t help thinking that $28m would come in handy for other local startups in the space that have so far seen not much more than a smile and wave from Canberra.

Local VC Blackbird is an investor in PsiQuantum, having jumped on board late in the deal during a $680m (US$450m) Series D in 2021 that valued the company at $4,8 billion (US$3.15bn).

And while the monitoring cost is fair whack of money as a budget line item, it’s not if you think of it in terms of venture capital management fees, which generally sit between 1-2.5% of committed capital.

We don’t know how much is equity and how much is debt in the government’s PsiQuantum deal, but let’s assume it’s half – circa $230m.

From a VC management fee perspective that would make $2.5m a year reasonable and at the bottom end of that scale.

Nonetheless, it’s worth remembering that for several months there have been broad concerns about the transparency around the government’s PsiQuantum investment and $27.7 million to keep an eye on it would do little salve those worries.