Fault-tolerant quantum computing would enable the simulation of processes that occur in nature but are too difficult for current computers, paving the way for breakthroughs in areas such as new drugs, battery design and even the pricing of financial products such as derivatives.

Some proponents argue it will also accelerate the development of artificial intelligence for use in autonomous cars or the prevention of fraud.

On Saturday, the government committed $18 million to create Quantum Australia, which will link the nation’s major universities with industry groups and strategic partners to turn research into practical outcomes in fields from cryptology to pharmaceuticals.

The federal and Queensland governments will invest $470 million each into the PsiQuantum project, through direct grants, equity stakes and loans. Part of the equity stake includes intellectual property held by PsiQuantum in the United States that will generate a rate of return for the government.

Industry Minister Ed Husic said the project was a chance to put Australia ahead of other nations in the race for fault-tolerant quantum computing, which was poised to change key parts of the global economy.

He said the financial interests of taxpayers were protected while the potential benefits for Australia were substantial.

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“We’ve ringfenced the finance. They have to meet milestones to access the capital, and there will be an economic return to Australia,” he said.

The government will soon reveal key elements of the laws and regulations that will govern its Future Made In Australia program to ensure financial support is funnelled into genuine start-ups in areas that align with the nation’s economic and national security goals.

Apart from building the quantum computer and setting up its regional base, the PsiQuantum project is expected to lead to investment in university and research collaborations, new digital and advanced technology supply chains and support advanced manufacturing clusters.

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The company’s CEO and co-founder is Jeremy O’Brien, who studied at the universities of Western Australia and Queensland and completed his PhD at the University of NSW. His co-founder is fellow Australian Terry Rudolph.

O’Brien said a fault-tolerant quantum computer could revolutionise the development of new drugs and lead to more efficient batteries in electric vehicles.

“A utility-scale quantum computer will be an invaluable tool for Australia’s critical industries to leverage,” he said.

“The promise of quantum computing is a true step change in the ways we understand and leverage chemistry, mathematics and physics in designing the world around us.”

At present, the company is based in Silicon Valley, where it has secured venture capital funding.

It has been looking around the world for its first computer site to build the infrastructure needed for its quantum computer.

The nation’s chief scientist, Cathy Foley, said quantum computing was a transformational and strategically important technology, arguing Australia could not take a “business-as-usual” approach to its local development.

“We must take advantage of the quantum technology wave to reach the industry scale needed by attracting quantum companies to set up manufacturing here,” she said.

“This investment shows that Australia is serious about its quantum industry development by ensuring we are at the front of the pack in the global race to build the first useful quantum computer.”

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