$1bn needed to keep Australia in the quantum fight: AIIA

The Australian Information Industry Association is urging the federal government to maintain the country’s global competitiveness in quantum technologies by investing $1 billion in quantum research and technology over the next five years.

The peak industry body has also called for the government to take on greater risk by nurturing the industry through contracts, not solely grants, as well as introduce tax concessions for intellectual property in quantum.

The recommendations are contained in the Australia Information Industry Association’s (AIIA) submission to the consultation for the national quantum strategy currently being developed by chief scientist Dr Cathy Foley.

Australian Information Industry Association CEO Simon Bush

According to the submission, a minimum of $1 billion in funding – almost ten times what it recommended for a national quantum computing centre in 2021 – will be needed in the medium-term to “match our global peers and competitors on a comparative basis”.

The AIIA said “Australia’s chief strategic investment in quantum technology” to date is the former Coalition government’s commitment to invest $111 million in a Quantum Commercialisation Hub and quantum strategy, noting there has also been investment through a series of grants.

The Albanese government has committed to create a $1 billion Critical Technologies Fund through the $15 billion National Reconstruction Fund, but the funding will be shared between dozens of other priority areas once the Critical Technologies List is refreshed.

“If we are to compete with our global counterparts and do justice to Australia’s initial reputation as a quantum leader, we must invest even more heavily in scaling up the Australian quantum sector,” the submission states.

At $1 billion, the quantum investment would still be less than half what Australia’s commensurate investment would need to be if it was to match China ($2.17 billion) on a GDP per capita basis, according to research from US management consultancy McKinsey cited by the AIIA.

At the very least, the the industry body is urging the government to make quantum technology a priority focus for investment through the Critical Technology Fund, funding quantum projects, startups and scaleups through co-investment schemes.

The submission, which was developed in consultation with AIIA members with quantum and quantum-linked product offerings, said nurturing the industry will take a “mindset shift”, with government required to “assume risk” through the greater use of contracts.

“AIIA members have expressed the view that, across the globe, certain technologies such as space technology and quantum technology are by nature strategic, national areas in which governments will naturally play a key role,” the AIIA said.

“Rather than merely seeking grants, or focusing exclusively on exporting, members of the Australian quantum industry are seeking viable contracts from government based on which they may plan and grow.”

The government should also aim is investment at “specialised areas of value and comparative advantage in Australian quantum supply chains” to allow industry to “find scale and see quicker, greater returns”.

Outside of direct support, the AIIA has called for a “concessional tax treatment to profits derived from eligible intellectual property in quantum technology” to attract companies to base their operations in Australia.

It has proposed that this be done “through an extension of a patent box”, echoing similar calls from the Australian Investment Council and the Group of Eight universities to extend the scheme to other areas of comparative advantage.

Recently appointed AIIA chief Simon Bush said the “government must lead in the adoption of quantum technologies and in part do this by chancing the way it traditionally looks to support growing critical sectors”.

“Government going to market to directly procure quantum solutions and capabilities is a mindset change and will help drive the local quantum industry along with a focus on commercialisation partnerships between industry privacy equity, investors and researchers,” he said.

“Translating Australia’s world-class research into prototypes, customers and contracts is vital for taking the sector to the next level.”

Last month, the CSIRO upgraded its economic forecast for quantum technology, predicting it will be a $4.6 billion industry in Australia by 2040 and a $6 billion in 2045, with direct quantum jobs slated to hit 19,400.

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