Australia and its allies are now faced with a once-in-a-generation opportunity to build a greenfield quantum technology industry, predicted by analysts to be worth over $1 trillion over the next decades.
It is perhaps the most significant export opportunity for Australian industry this century and represents a chance for Australia to exert leadership, secure international respect, and deliver prosperity for a broad swath of the Australian economy.
The following policy recommendations will accelerate the quantum opportunity in Australia and ensure a global growth success story for home-grown critical quantum technologies.
In summary, they amount to prioritising capture of a commercial opportunity without parallel in modern times.
Fund a range of efforts, in parallel, at truly transformational scale ($5 billion/5 years).
When we invest in the quantum opportunity, we need to think differently than we have in the past. In strategic technology, development speed is of the essence and we can deliver massive dividends if we move quickly.
This means breaking out of a pattern of awarding small funding increments that prioritise risk minimisation, in order to help industry partners reach critical scale. We need large-scale, parallel awards that ensure we are the first to major achievements.
Modernise the regulatory environment to enable commercial upsides.
The alignment of quantum technology with national security provides an opportunity to deliver exceptional advances in sovereign capability. The dual-use opportunities are even larger, unlocking totally new business models and touching every aspect of the Australian economy. Quantum technology can be the thread connecting a range of emerging opportunities.
To facilitate both sides of this opportunity, the quantum industry must collaborate with government to ensure regulatory frameworks support the full realisation of the commercial quantum opportunity at a higher priority than antiproliferation risk management.
Align with AUKUS partners to produce a force-multiplier effect enabling impact at scale.
Australia is seeing early wins in the establishment of globally competitive commercial startups. But our sector is now faced with a new dilemma – how do we sustain companies that transition from startups to scaleups and need growth funding at Series B and Series C?
It’s time that in the strategically important quantum technology field we actively expand sovereign capability to include solutions built between the AUKUS allies.
We encourage focused effort between the governments to support a range of targeted projects involving cross-border partnerships – first at small scale and then growing in the future. Quantum technology promises to be as transformational in the 21st Century as harnessing electricity was in the 19th.
The applications are nearly limitless: from new financial and Artificial Intelligence (AI) algorithms to novel solutions in materials engineering and industrial chemistry by quantum computers; from new ways to track underground water to the ability to navigate undersea or in deep space using quantum sensors.
Quantum technology is the 21st Century innovation that will underpin a host of other industries – from agriculture and defence to artificial intelligence and cybersecurity – and will deliver maximum prosperity to the broadest section of the Australian public.
As our industry matures, the benefits of an investment in quantum technology will impact government, large industries, families, and small businesses, and deliver new defence and commercial opportunities to regional Australia.
And if this sounds fanciful, just remember that the first true application of quantum technology – global positioning system (GPS) based on ultra-stable quantum clocks – has already totally changed the world. It has delivered convenience in the cities, and empowered graziers1 and remote learning in regional Australia. The full quantum opportunity will deliver benefits that make the transformation of GPS appear minuscule.
Most importantly, the quantum opportunity delivers Australia a chance to exert international leadership in a critical area. Australian scientists have featured prominently in the most competitive international funding programs in quantum science since the late 90s.
I founded Q-CTRL in November 2017 with the mission to make quantum technology useful for real applications through our special capabilities in quantum control. We’re a global business and appear on most ‘top ten’ lists for the world’s best quantum startups; we’re also Australia’s first venture-capital-backed quantum tech startup. We’re eager to leverage our leadership position in the sector to build the foundations for transformative outcomes.
The research community that welcomed me 12 years ago is internationally recognised as one of the strongest in the world for quantum computing. Building on this scientific strength to deliver on the full quantum opportunity positions Australia to be a respected senior partner on the global stage.
The current moment should be seen for what it is – an opportunity to deliver pride, prosperity, and strategic advantage. A policy framework that reflects this is within reach by focusing first and foremost on the upside before us.
Recommendation 1: Fund multiple efforts at transformative scale
For a long-time-horizon deeptech sector like quantum technology, ongoing research and technology development will be essential over the coming years. Despite early commercial successes, a foundation of research programs will be essential for growth of the industry.
Seizing the quantum opportunity requires us to think differently from past research funding models. Quantum technology has already been identified as a ‘winner’ in its designation as a critical technology. Now we need to go one step further, securing transformational funding across as many domestic participants as possible.
In realising the quantum opportunity, a modest funding allocation of just $5 billion out of the $70 billion spent on research and translation overall can deliver on the scale of opportunity we’re aiming to achieve.
Fund at scale
A key concept in Research & Development (R&D) is that if funding is sufficiently large, recipients can scale up their efforts in a manner that grows nonlinearly. Instead of $1 of investment in and $1 of value out, $10 million in can yield $50 million or $100 million of value out.
This is assuming our global leadership position in the emerging quantum industry requires that we support companies at a level that signals growth opportunity to private sector investors, and enables the acceleration of technical outcomes so organisations break out of rolling subsistence contracts.
We want to enable companies to hit escape velocity; for most established but young startups this means a scale of more than $10 million per year over a five-year period. Much less than this and they just stay in their current orbit.
Fund multiple performers
We need to see government investing in many different programs – even supporting multiple teams working on the same topic. This isn’t waste or duplication; it’s risk management embedded in an ambitious framework.
Some failure must be assumed in world-changing R&D programs. At the Defense Advanced Research Projects Agency (DARPA), where I used to work and perhaps the world’s most successful research funding body, we informally targeted about a 50 per cent program failure rate, otherwise we were being too conservative. But, as they say, we also didn’t put all our eggs in one basket.
There is plenty of talent in Australia. If we ensure that funding isn’t driven by a scarcity mindset we can deliver much more than individual successes.
Fund diverse performers
An Australian quantum technology industry must be more than a cohort of high-growth technology companies. It must involve large multinationals investing domestically like Microsoft as well as scientists engaged in basic research. And it must respect the different drivers between these sectors.
The funding strategy we propose can deliver a diversified sector securing prosperity in both the near term and the long term by supporting exploratory science alongside research translation and pure commercial technology development.
The strength of Australian fundamental research in quantum technology must continue to serve as an engine for creativity over the long term.
But overall, our focus must remain on outcomes rather than structures. An exceptional opportunity to support a purely commercial project should not be slowed down to force a partnership with a university.
Nor should a groundbreaking fundamental research concept require a commercialisation partner in industry to proceed. Partnerships should be natural and considered a means to an end, not the policy end in itself.
A $5 billion investment over five years could support the following programmatic breakdown:
- 25 individual industry performers at a scale of $20 million per year each to drive forward their key initiatives in quantum computing, quantum sensing, and quantum communications ($500 million per year)
- 100 academic research projects at $2 million per year addressing long-term fundamental challenges, and awarded/assessed quarterly on a rolling basis like the sovereign industry capability priority program ($200 million per year)
- 50 translational seed projects supporting early-stage commercialisation of publicly funded research outcomes at $1 million per year ($50 million per year)
- Two major new forward acquisition programs per year leveraging the buying power of government to preorder future capability at $50 million each ($100 million per year)
- A strategic fund of $150 million per year for newly identified opportunities across academia and industry.
Recommendation 2: Modernise the regulatory environment to support commercial upsides
Quantum technology has the unique advantage of delivering enormous commercial potential and strategic defence advantages.
Concretely, capturing the quantum opportunity starts with ensuring the defence-drivers of local R&D investment align from day one on generating exportable commercial technologies.
Despite two decades of US dominance, China is rapidly rising in the quantum technology sector. In light of this shift, as well as broader geopolitics, concern has risen in Australian security circles about the proliferation of quantum technology to adversarial nations.
Looked at holistically, Australia’s policy approach to quantum technology to date has largely been about mitigating downsides via restrictions: new constraints on foreign investment into quantum businesses in Australia, new emerging export controls, new defence industry compliance standards (that are not fit for purpose in tech startups) and likely more to come.
In policy discussions and frameworks, we would benefit from collaboratively prioritising the upside of this commercial opportunity for Australia, rather than the potential downsides of proliferation risk.
If we move rapidly and support maximisation of the commercial opportunity, risks are intrinsically mitigated. Being first to own the industry and associated strategic technologies is most important.
To build a thriving and resilient quantum industry on shore we need to modernise our regulatory approach with an eye towards enabling high-impact commercial opportunities.
Secure technology exports
The quantum technology sector currently faces real uncertainty around its ability to export its own technologies. The most significant concern revolves around the legislated right of the Defence Export Controls Office to deem any technology developed with Defence-agency support (Australian or international) as a military technology, and therefore subject to stringent export restrictions even if the envisioned end use is itself not restricted.
This is particularly important when right now the dominant local opportunities for investment are aligned with or driven by Defence demand. This includes, for instance, the STARShot programs which cover both quantum clocks and quantum-enhanced navigation technology – two highly valuable near-term applications of quantum technology.
Any new government quantum technology programs should guarantee that dual-use opportunities can be capitalised upon, granting advance clearance for export and guarantees that government will not add new security restrictions that inhibit future commercialisation plans. Likely restrictions should be communicated upfront to the commercial performers and strictly limited against scope creep.
Make Australia the most attractive destination for foreign capital investment in quantum
Australian tech is heavily reliant on foreign inflows to supply working capital, as the local venture capital industry is comparatively immature in its ability to support growth-stage companies.
Meanwhile, the economic proposition for investment in Australian companies is strong – talent is exceptional and costs are much more moderate than overheated locations like Silicon Valley.
Our mission is to actively entice foreign investors to see Australian quantum technology as a key opportunity for their capital.
To this end, critical technologies – of which quantum tech is a subcategory – present an opportunity to realign regulation of foreign investment to specifically facilitate foreign capital inflows from strategic international partners.
Q-CTRL has made detailed submissions about how Foreign Investment Review Board (FIRB) could be amended to better support early-stage tech investment in Australia in both 2020 and 2021.
Making these broader changes will take time, but for now it’s imperative that we work to actively and preemptively whitelist investors from within allied nations. This is structurally similar to the proactive outreach undertaken by the Department of Immigration in attracting high-talent immigrants.
Recommendation 3: Build around AUKUS to amplify the opportunity
Australia is seeing early wins in the establishment of globally competitive commercial startups. But our success is now breeding a new dilemma – how do we sustain companies that transition from startups to scaleups and need growth funding at Series B and Series C?
What does a global growth story look like for home-grown quantum tech companies that try to maintain a dominant presence in Australia while working in a critical technology?
In answering these questions, we can look to AUKUS and the opportunities for stronger collaboration between these allied nations and other related partners. These are the nations we tend to work most closely with, so formalising and streamlining these relationships can be a huge win for the quantum industry in Australia.
For example, Q-CTRL is already extremely active across the three AUKUS jurisdictions. In Australia, we host our main software development and experimental quantum sensing teams in collaboration with commercial partners like Advanced Navigation and MOGLabs, academic institutions like the Australian National University, and our partners in Australian Defence and the Department of Industry.
In the UK, we are currently bidding to deliver a major educational platform to help upskill professionals entering the quantum computing industry. In the US we host a quantum computing R&D team, an associated product engineering team, dozens of commercial customers, and partnerships in the US Department of Energy to build automation software for large-scale quantum computers.
These partnerships are natural for us and for many other globally active quantum technology companies within the AUKUS framework. But, we could do so much more.
Our AUKUS partners are friends and allies with shared values and complementary quantum technology capabilities. The partnerships we could form would be worth far more than the sum of their parts and could facilitate the next stage of growth for our local commercial successes.
It’s time that in a strategically important and rapidly evolving field like quantum technology we actively redefine sovereign capability to include solutions built between the AUKUS allies.
To this end, focused effort between the governments to support a range of targeted projects involving cross-border partnerships – first at small scale and then growing in the future – would be a tremendous accelerant.
Australia has a once-in-a-generation opportunity to capitalise on its long-term investments in an emerging technology area; an area which has also seen co-investment with strategic partners in the US and UK.
We were excited by the CSIRO vision for quantum technology in Australia; we believe that these initial scoping exercises have identified an opportunity that could be enhanced ten times over if we establish the strongest possible foundations for private sector growth in Australia. The success of Q-CTRL and our peer companies in just the last several years underpins this optimism.
The time to act is now.
Professor Michael Biercuk is the Founder and Chief Executive Officer of Q-CTRL, a venture capital-backed quantum technology company. In his academic role, he is a Chief Investigator in the Australian Research Council Centre of Excellence for Engineered Quantum Systems.
Footnotes
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