Innovation is critical to Australia’s growth and its preparedness for emerging economic, social and environmental challenges. Governments play a major role in shaping the innovation system through the design and governance of institutions, in supporting the education and training of scientists and engineers, and in funding high-value research that would not otherwise be undertaken by businesses. Governments also play a direct role through their own public sector research agencies and by financing R&D in universities and businesses. Overall funding was around $6 billion in 2004-05.

This report examines the impacts of such public support for science and innovation, and considers the prospects for improving outcomes by eliminating impediments to innovation or by changing the way government support is channelled to its various competing uses. The Commission was not requested to systematically review all individual programs. It has therefore adopted a strategic approach, identifying particularly important programs or funding areas and investigating the grounds for their reform.

The overall conclusion is that public support for science and innovation has, by and large, provided widespread and important benefits for Australians. Nevertheless, there is room for considerable improvement in key areas of Australia’s innovation system, spanning ineffective business programs, a sometimes excessive focus on the commercialisation stages of innovation, problems in scientific labour markets, inadequate evaluation methods and problematic funding models.