Pinnacle blew opportunity: Govt

THE State Government’s decision not to support the Pinnacle Blue supercomputer came as no surprise to those in WA’s technology sector.

Six months after the project was expected to receive Cabinet approval, the Government last week withdrew its offer of a $30 million no-interest loan to get developmental work on the $280 million project started.

The concept has attracted a significant amount of comment, both for and against, since it was announced late last year.

To some it represented an ideal opportunity to put Perth on the national, and international, stage as a home of leading-edge technological development. The Government’s funding of the project would also allow it to draw significant revenue from its use by private firms.

But to others it represented a possible case of the Government ‘playing favourites’ with private enterprise without paying sufficient attention to the needs of the broader technology industry in WA.

Industry sources said that, from the start, the project had failed to meet the State Government’s commercial expectations. As WA Business News reported three weeks ago, the project also failed to meet due diligence processes undertaken by technology commercialisation company QPSX and accounting firm Ernst&Young.

The Department of Industry and Technology (DoIT) has remained tight-lipped about the Pinnacle Blue project, referring all questions to the premier’s office.

It is known, however, that there is concern inside and outside the department at insinuations about the reasons for its change in position on Pinnacle Blue, from initial support to the withdrawal of that support.

A spokesman for the premier said that, before and after the Department of Premier and Cabinet assumed responsibility for the project from DoIT, there had been an ongoing assessment of the project’s compliance with a number of legal and commercial conditions.

“The Government made and in-principle decision to support this project, but that decision was contingent on Pinnacle Blue meeting certain terms and conditions to qualify for a $30 million government loan,” the spokesman said.

“It failed to meet those terms and conditions, and therefore the Government’s conditional support was withdrawn.”

The spokesman added that the broad idea of a supercomputing facility remained attractive to the Government, but there was no other proposal and it could be that none would emerge.

“It is to the Government’s credit that it exercised due diligence and once again put the public interest well ahead of any particular private interest,” he said.

The spokesman confirmed no government money had been provided to the project’s proponents, Pinnacle Blue Ltd, which is wholly owned by YZEPT Pty Ltd – in a consortium with other companies including IBM – and which is run from the West Perth office of Alliance Energy.

Chairman of the Australian Information Industry Association in WA Phil Foxwell said the AIIA had not formalised a policy position on Pinnacle Blue.

He said on that basis it was inappropriate to venture an opinion on the project’s demise.

Another source suggested it was impossible to know whether the Government’s decision was correct because there was no precedent on the worth of a supercomputer.

“We don’t know whether a supercomputer would’ve been worth $100 million to the State or $10 million,” the source said.

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