Innovation is central to competitiveness and productivity in the State economy for both traditional and emerging economic sectors and has underpinned WA’s remarkable economic growth. However, in recent years the State’s innovation performance has lagged by comparison with other States and this decline is even more concerning when placed in an international context where Australia has relatively low levels of innovation efficiency and collaboration between research and industry. This report reflects TIAC’s desire to see a culture of innovation in WA to support economic diversity and growth. Its aim is to assist the West Australian State Government (WA Government) in addressing the key questions: “What do we need to do, and where should we focus our resources and attention to stimulate innovation in business, government and community sectors?” Knowledge will be essential in developing strategies, knowledge of the competencies ** that exist and are growing in Western Australia, the sectors the competencies support, cross sectoral linkages and where there is existing concentrations of industry providing a foundation for a cluster. The recommendations guide and inform development of innovation policy responses aimed at strengthening and diversifying the State’s economy. TIAC believes that clusters of increasing innovative capability are one of the most effective environments for innovation to be sparked, driven and converted to improved productivity, new commercial assets and increased economic value. Innovation can and does happen in isolation, but the successful outcome can face greater challenges. Collaboration, cooperation and support will drive greater success. TIAC considers that a more nuanced understanding of WA’s current innovation system and its constituent networks and clusters is needed before effective policies are developed. In this document TIAC offers suggestions for achieving this outcome. Innovation networks and clusters may range from members of a single incubator to a mature industry cluster (Australian Marine Complex, Henderson) and we need to understand their systems, linkages and the underlying competencies to assist innovation. For example, how can clusters be organised more effectively to speed up the rate at which ideas flow through the economy and transfer between sectors? What regulatory environment will facilitate cluster growth and accelerate the rate at which innovation moves through ‘concept-tocommercialisation’ stages? The role of individual and small team innovators outside of recognised clusters must also be assessed. TIAC’s recommendations provide suggestions to better understand the WA innovation system. At their core is a proposal that the WA Government, in partnership with organisations from industry and technology, start-ups and institutional research, initiates spatial analysis to identify, classify and map the wide range of innovation networks and clusters (both physical and virtual) within the metropolitan and regional areas. A second stage to the project could seek to identify gaps, impediments, keys to success, and the different types of “proximity” that can optimise competitive advantage through innovative practise.