Quantum technology is billed as a revolutionary technology for computing, security and detection. A 2022 CSIRO report estimated that, by 2045, Australia’s quantum industry could generate A$5.9 billion in revenue and 19,400 jobs (similar to the number employed in the oil and gas industry). But with so much at stake, is Australia investing enough to make the most of this opportunity?
Clearly, both Australia and the world are interested. This year, Australia released its first National Quantum Strategy and quantum technology was included on the critical technologies list due to its impact on national security and economic prosperity. Governments worldwide have taken an interest – references to quantum technology have been popping up in statements from G7 leaders and the Quad – and as of 2022, governments have invested US$30 billion in quantum technology. Annual private-sector investment has quadrupled since 2019, with quantum start-ups raising billions of dollars of capital, alongside hundreds of millions invested by large tech players.
Australia has ambitions to grow a globally competitive quantum industry, but its future depends on how it invests in quantum research and commercialisation today. The National Quantum Strategy is a start but more may need to be done to combat the challenges the industry faces and take advantage of the opportunities the technology presents.
What is quantum technology?
At very small scales, particles behave differently than what can be seen at the macroscopic level, they can exist in two states at once or interact with each other across large distances. This behaviour is called quantum mechanics, and quantum technology harnesses quantum mechanics to advance technology. Quantum technologies can be classified into three fields:
- Quantum computing: relies on the principle of quantum superposition, where particles can exist in two states at once. Traditional computers use ‘bits’ – values stored as either 0s or 1s – strung together to create information. Quantum computers have quantum bits (called qubits) that exist as combinations of both 0 and 1 simultaneously, existing along a spectrum as opposed to the binary option of standard computing. This enables computers to perform complex computations much faster, leading to improved modelling, optimisation and simulations.
- Quantum communication: transmits information over long distances securely by using a quantum key to encrypt the data. When observed, qubits no longer exist as both 0 and 1, so when someone observes a quantum key, it leaves traces behind. This means someone transmitting information will know if their communication has been intercepted, leading to more secure communication and encryption methods. There is also the possibility of using quantum entanglement, where a pair of photons are connected so that changing one photon changes the other, to effectively ‘teleport’ information securely between a sender and receiver.
- Quantum sensing: uses properties of quantum mechanics to create sensors that are more sensitive to their surroundings, such as using quantum entanglement to measure just one atom and learn about a whole system. This can be used in detection, to improve the precision of measurements and navigation, and to provide more detailed imaging. For example, atomic clocks use the oscillations of atoms to very precisely measure time.
Quantum technology has applications across a wide variety of industries, including:
- Security: quantum technology can lead to more secure transmission of information without interception, improving long-distance communication and detection for military and national security agencies. Sensors can also improve navigation and positioning for the military. On the flip side, quantum computers can also enable access to systems that use current encryption methods, posing a potential security threat. An emerging field, post-quantum cryptography, aims to develop secure systems against quantum computer cyber-attacks.
- Materials science: simulations from quantum computers can be used to better understand the properties and chemistry of materials, with applications for the medical, manufacturing and agricultural industries.
- Mining: quantum sensors can be used to detect underground minerals.
There is also the potential to use quantum technology in other industries as the technology advances:
- Healthcare: the enhanced modelling capabilities of quantum computers could be used to better design drugs by simulating the way molecules interact with the body and eventually, the more powerful optimisation computations could develop personalised treatment plans for patients. Quantum sensors can also improve medical imaging by more precisely measuring magnetic fields in the human body.
- Logistics and supply chains: the enhanced computational power of quantum computers could be used to model the most optimal supply chains and transport routes for businesses that would take conventional computers hundreds of years to process.
Where is quantum research and commercialisation happening?
Globally, governments have invested billions of dollars in the research and commercialisation of quantum technology. The United States is the world leader in quantum computing and quantum sensing capabilities, while China leads in quantum communication. The United Kingdom, the European Union, Japan and Canada are also major investors in quantum technology, with Australia ranking 12th in the world for public quantum investment.
As quantum technology has matured, more quantum start-ups and companies have emerged, attracting investment from the private sector. Globally, in 2022, quantum technology start-ups raised US$2.35 billion in private and public investment, an increase of more than 400 per cent since 2019. There are over 300 quantum companies operating worldwide, led by the United States, Canada, China and the United Kingdom, alongside significant investments from large technology players such as IBM, Microsoft, Google and Amazon.
Where does Australia fit into the global quantum landscape?
Australia has a long history of quantum research. Australian universities were at the forefront of research during the 1990s and 2000s, attracting researchers and funding from overseas, and training hundreds of local quantum PhDs and workers, particularly through investments in quantum-related research centres. These began in 2000 with the Centre for Quantum Computer Technology and today, the Australian Research Council funds three quantum Centres of Excellence: Engineered Quantum Systems, Quantum Computation and Communication Technology and Quantum Biotechnology. The Centre for Future Low-Energy Electronics Technologies also conducts research in quantum technology. These Centres have produced over 2000 papers and over 100 patents, including the world’s first silicon integrated circuit and the first demonstration of quantum entanglement. Over 500 scientists work in these centres, collaborating across 13 Australian universities.
This investment in R&D has led Australia to be considered a leader in quantum research, particularly considering the size of its population and economy.
This investment in R&D has led Australia to be considered a leader in quantum research, particularly considering the size of its population and economy. It has developed world-leading capabilities in error correction of quantum computing, quantum optics, diamond quantum computing, silicon quantum computing and quantum algorithms. It ranks sixth in the world for the number of universities offering quantum research programs, and eighth for its share of published quantum articles. There is a large global diaspora of Australian-trained quantum scientists who now work in quantum research at large multinationals and its scientists have founded some of the world’s largest quantum start-ups, including Xanadu in Canada and PsiQuantum in the United States.
How has Australia invested in quantum technology?
The Australian Government has signalled an interest in further developing quantum technology at home. Due to quantum’s advanced capabilities and security implications, the government recognises quantum technology as one of the seven critical technologies in the national interest and it has been included as an area of collaboration with our allies and partners in AUKUS Pillar II and in the Quad. Quantum technologies have attracted financial investment from federal and state governments, along with private investors.
In May 2023, the Australian Government released its first National Quantum Strategy. The strategy outlines actions to develop a quantum industry, including investing in R&D, supporting the commercialisation of quantum technology, building a quantum workforce, collaborating with international partners, and leading global ethics and standards setting. However, no funding was announced alongside the strategy to implement its recommendations.
The Australian Government has dedicated millions to quantum technology, particularly in the R&D and workforce spaces through its Centres of Excellence. But, beyond some direct grants to start-ups, there have been fewer investments in commercialisation. Positively, there has been a recent uptick in public investment, with A$55 million in grant funding allocated to the quantum industry in the 2023-24 budget for a challenges program and an industry growth centre. Quantum technology is also one of the many focuses of the National Reconstruction Fund (a government financing body for Australia’s industries) and the Defence Trailblazer (federal funding for commercialisation of defence innovation). However, two Centres of Excellence – Engineering Quantum Systems and Quantum Computation and Communication Technology – are due to close in 2025, with no indication of what, if any, R&D funding will replace them.
State governments have also invested in quantum technology, particularly the NSW, Victorian and Queensland governments, where most of the leading quantum researchers and start-ups are located. The Victorian Government’s investment fund, Breakthrough Victoria, has made two multimillion-dollar investments in quantum start-ups, including a US-based firm which has since deepened its partnership with Victoria, expanding into Melbourne. The NSW Government created an A$15 million Sydney Quantum Academy from its Quantum Computing Fund to build a local quantum computing workforce and launched an A$7 million Quantum Computing Commercialisation Fund. In October 2023, the Queensland Government launched its own Quantum and Advanced Technologies Strategy, alongside A$76 million in funding for commercialisation, workforce and supporting infrastructure, the largest public investment in the country to date.
Figure 1: List of public investments in quantum technology
*Note: The overall budgets for the Quantum Growth and Critical Technologies Challenge Program were $19.8 million and $40.2 million respectively, however, more recent sources state the available grant funding is $18.5 million and $36 million.
Several government departments also recognise the utility of quantum technology for their operations. For example, Transport for NSW has created a Quantum Technology Team, and partnered with IBM, Microsoft and Australian start-ups Q-CTRL and Silicon Quantum Computing to create quantum technology for transport modelling, while the NSW Office of the Chief Scientist is funding two projects with Q-CTRL and computing start-up Diraq. The Department of Defence has also contracted Q-CTRL to build quantum sensors for submarines and other vessels.
There are currently over 10 Australian-based quantum technology start-ups (ranking eighth globally for quantum computing), many spun out from universities. Australian start-ups attracted 3.6 per cent of global venture capital (VC) investment in quantum technology from 2017-2021, above Australia’s total global VC share of 1.6 per cent. Funds were sourced from investors such as Main Sequence Ventures, Blackbird, Commonwealth Bank, Westpac, Telstra, Airbus, and Salesforce.
Prominent Australian quantum start-ups include:
Figure 2: List of major Australian quantum technology start-ups
Other start-ups include Archer Materials, Jovian Tech, Analog Quantum Circuits and QuantX Labs. Start-ups providing scientific instruments to enable quantum research include Redback Systems, MOGLabs and Liquid Instruments.
Rigetti Computing, a leading US-based quantum company, has also established an office in Sydney, and Infleqtion has expanded into Melbourne. Global technology companies have invested in quantum research in Australian universities, including IBM at the University of Melbourne, Microsoft at the University of Sydney, and Google with four Sydney-based universities.
What opportunities and challenges exist in the quantum sector?
Australia’s history of quantum research has led to the development of a capable local industry and workforce. However, other countries have recently begun to invest significantly in the commercialisation of quantum technology, which risks attracting Australian businesses and talent overseas.
The recent National Quantum Strategy was launched without funding to implement its recommendations to invest in quantum research, workforce and infrastructure. This is in contrast to Canada which backed its National Quantum Strategy with an A$410 million investment, half of which was allocated to commercialisation, and the Queensland Government which announced A$76 million for its strategy. Also this year, Germany announced an action plan for quantum technologies, complete with €3 billion euros of funding and the United Kingdom announced £2.5 billion alongside the launch of its National Quantum Strategy. In 2018, the United States passed the National Quantum Initiative Act and established a Coordination Office which operates research centres across the country, invests in a quantum workforce and provides information on grants and events. In 2022 alone, the United States provided US$918 million for quantum R&D.
International funding and brain drain
To take advantage of overseas expertise and investment opportunities, Australian quantum start-ups Q-CTRL, Quintessence Labs, Quantum Brilliance and Nomad Atomics opened offices in the United States, Germany, and the United Kingdom.
There are benefits to this overseas expansion, Australian researchers may be able to access overseas funding, gain experience and collaborate with overseas researchers. But one challenge that may arise for the future of Australia’s quantum sector is a more permanent loss of talent overseas. For example, a brain drain of researchers could occur after two Centres of Excellence close in 2025. This would not only decrease the available quantum workforce in Australia but also reduce the number of leaders and teachers to train the next generation of quantum researchers.
One challenge that may arise for the future of Australia’s quantum sector is a more permanent loss of talent overseas.
To reduce the risks of brain drain and and take advantage of international interest in Australian quantum expertise, the Australian Government may consider:
- Co-funding quantum research with other countries in areas that align with our domestic interests and allow for shared expertise and two-way talent flows.
- The future Centre for Quantum Growth could contain a ‘one-stop-shop’ map of funding available for quantum researchers and start-ups, including the timeframes. Investments in quantum technology often form part of larger pools of money such as the National Reconstruction Fund, Australian Economic Accelerator and Defence Trailblazer. This can create uncertainty for researchers and start-ups. Mapping of the funding available, and their timelines, could assist researchers to understand the quantum investment landscape and identify gaps.
- Continuing to provide funding for quantum R&D in the long-term to continue advancing the technology and training a quantum workforce. For example, by continuing to fund quantum-relevant Centres of Excellence after 2025, funding PhDs and visas for international researchers, and through direct funding to research occurring at quantum start-ups.
Australia has established partnerships with some of the world’s leaders in quantum technology through the AUKUS Quantum Arrangement and the Quad. The United States and the United Kingdom are two of the world’s leaders in quantum technology while Japan and India have made recent significant investments. The United States, in particular, has invested in Australia’s quantum research for decades. The University of Sydney’s quantum research receives funding from the US Army, Navy and Air Force research offices, while the US Army Research Office has invested A$36 million in UNSW’s quantum research program and recently funded a project with Q-CTRL and Diraq as part of AUKUS Pillar II.
- As Australia embarks on multiple quantum R&D ventures, a coordination mechanism could be useful to ensure it maximises the collaborative opportunities from international partnerships, including the AUKUS Quantum Arrangement, quantum partnerships with the United States, France and India, partnerships with US multinationals, and the Quad (including the Quad Fellowship and Quad Investors Network). It could provide an opportunity to align and cooperate on research efforts, share expertise and attract overseas investment.
Applications for the private sector
The potential applications of quantum technology could increase Australian public and private sector productivity. For example, quantum sensors could be used for mining exploration (for detection) and agriculture (to monitor crop growth). The enhanced optimisation power of quantum computers could be used to increase the efficiency of the transportation and finance sectors, and its applications in materials science could benefit the biotechnology industry and improve future hydrogen and battery technologies. Developing and retaining a local quantum industry could create revenue and jobs in Australia while enabling the development of quantum technology applications useful to local industries.
However, developing quantum computers capable of solving complex problems will take many years, or even decades, and will require long-term R&D investments before these applications can be realised, which can lead to challenges attracting private investment in the near term. Opportunities to demonstrate the commercial applications of quantum technology could attract increased private-sector investment in Australian quantum technology companies.
- The Australian Government could broaden a previous recommendation (from CSIRO) to establish projects that demonstrate commercial applications for quantum (such as investments made by Transport for NSW and the Department of Defence), to more departments.
- These could include Geosciences Australia (quantum sensing) or the Department of Home Affairs (cyber security). This has the dual advantage of increasing the demand for quantum technology from Australian start-ups through contracts and demonstrating their applications to Australian industries.
- However, it might also be communicated to industry that the technology capable of realising these applications could be over a decade away.
- The Australian Government could ensure that its main grants program, the A$36 million Critical Technologies Challenge Program, partners with private finance to enhance the impact of the program.
While Australia may not be able to provide the huge public investments that other countries can, it should take advantage of the strengths and capabilities it has developed to build an industry and commercialise technologies for the future.