I have a strong feeling that this country of ours will never succeed in the ways we want it to, until we re-design the Federal/State arrangements.
I my book, the Federal Govt. should be responsible for the infrastructure - schools, hospitals, roads, railways - while the States should be in charge of operational matters - staff, administration, fittings etc.
Certainly there would be a huge amount of rationalisation to be accomplished, but if we had politicians who were prepared to put governance ahead of party politics, it could be done.
Once such a system was in place, the scene would be set for citizens to take part in either the infrastructure or the implementation.
But I fear such a rationalisation is beyond us - we do not have the imagination or the will to succeed in our elected representatives.

@Tim,

would like to share with you the following link which presents a number of testimonials from some leading researchers/ innovators (note bio below). In the online introduction on this site, they discuss the importance of federal funding in the research and its role it played in achieving their specific results.

http://www.goldengooseaward.org/

A point which i would like to add to this video, is that marketing is the key to attracting interest and funding. In my personal experience of trying to sell my own innovative software, I was once confronted by a department Head in the Health department when i was trying to make my pitch, and i was given a very profound piece of advice which at the time I did not appreciate..

"Good marketing wins over good product every time"

As part of the marketing strategy, these online videos and the forum that they are presented creates a number of different channels of awareness that
i believe will create new possible sources of funding for Australian research.

just food for thought.

AWARDEE: Charles Townes SCIENCE: The Maser FEDERAL FUNDING AGENCIES: National Science Foundation, Office of Naval Research For a decade-long stretch of his career, Charles H. Townes, the inventor of laser technology, had to fight to convince others of the possibility, and the value, of the seemingly obscure technique of amplifying waves of radiation into an...

Green Fluorescent Protein

AWARDEES: Osamu Shimomura, Martin Chalfie, Roger Tsien SCIENCE: Medical Advances from Jellyfish FEDERAL FUNDING AGENCIES: National Science Foundation, National Institutes of Health In 1961, no one would have predicted that studying why a jellyfish glows green would one day lead to advances in genetics, cell biology, developmental biology, and neurobiology, to a better understanding of cancer, brain...

Coralline Ceramics

AWARDEES: Jon Weber, Eugene White, Rodney White and Della Roy SCIENCE: Bone Grafts from Coral FEDERAL FUNDING AGENCY: National Institutes of Health In a serendipitous merging of research interests that began in the 1960s, four scientists in different fields came up with an ideal bone graft material from an unlikely source: the coral found in...

"The establishment of a translational (innovation) research council that has similar status to the ARC and NH&MRC to support innovation, would send a strong signal..."

My main problem with these ideas are that insistence on translational research is the cart leading the horse. As a pure research scientist my entire career since the 70s I have observed the creation of new industries that have become giants that indeed form the basis for real translational outcomes. None of which were nurtured in Australia despite expats often being leading lights in those fields. The word "research" doesn't really belong here; it is really the D (development) in R&D. In Australia there has been no lacking in official momentum towards "translational" funding, indeed quite the opposite.

In Australia it is increasingly difficult to get a research grant (NHMRC) that isn't heavily justified by claims of being translational. Politicians, especially Ministers of Health, want to hear magic words about cures and treatments blah blah and the managerialist research apparatus jumps to the tune. Not only has this degraded true fundamental research (the more innovative a research application, the less likely it is to be funded) but it has encouraged a fundamentally perverting interlocking of academe and industry. It is confusing the flow of research and research scientists from academe into industry, with the original research so that it is increasingly dictated and contingent upon outcomes on a near-time horizon.

It is saying that we should support the work of Florey (essentially the D part of penicillin R&D) without supporting the tootling about of Fleming (the R part that actually made the crucial discovery). It is saying we want a biotech industry without ever really supporting Genome research (again despite many expats playing significant roles o/s of course). No accident that the first marsupial genome was sequenced in the US; ditto for Australia's unique collection of flora with its potential in drought resistance, etc.

Of course there needs to be translational work but real research needs strong quarantining from the often simplistic (and intellectually lazy) notion that all research needs to have some translational focus. To just peek at Australia's recent Nobel recipients: Elizabeth Blackburn's work on telomeres was as fundamental as research gets yet is now predicted to have huge potential real world application (cancer, ageing). Ironically--but so sadly indicative of Australian attitudes--Marshall and Warren were refused NHMRC funding yet their work is probably the ultimate in successful translational research. (I use it as a marker to assess suggestions of how to fund research: if a system could not find space to fund such people then it is a failure; NHMRC continues to fail.) Peter Doherty's work was also fundamental yet his story of disillusionment here and wildly successful career o/s is well known. Decades later (the usual story for translation from fundamental research to actual real world applications) his work has huge application.

Australia's failure is at all levels. I won't address it here, but our educational system seems more and more a credentialization factory. Next, our support of research is poor in dollar/GDP terms and even worse with all this diversion to "translational" focus. Third, our support for actual translational work--best done by industry--is even poorer. We are too small to expect industry or private wealth to fund it so I believe there is a role for government, though not directly (ie. not to choose what to fund) but to allocate a percentage of funds to that end; say a directive to bank lending etc. And there is no getting away from it: there needs to be a robust nationalism to this lending so that any work that shows a bit of promise doesn't quickly get offshored for a quick buck in the usual manner.

Innovation is about culture, behaviour, incentives, drivers and rewards. We need to be innovative because of low offshore labour costs. Manufacturing off shore is a different issue from innovation.

@Gary,
Free trade.. no such thing.. Most countries around the world have either direct tariffs or back handed subsidies that prop up their industry or like China have controlled their exchange rate.

All these mechanisms are in place to protect strategic industries such as food, or certain industries.. and most importantly the health of our own economy.

Seems like Australia is out there in promoting free trade which has created a blood bath killing 90% of our manufacturing industry. However, in many ways free has made us more efficient on the world stage and industries we do have compete on the world stage.. well until the high Australian dollar poured water all over our competitiveness and killed even the efficient players.

Innovation is important but the biggest killer of innovation is the business model / infrastructure that is the vehicle needed to take Innovation into the future.. In many ways where we need innovation and freedom is in mechanism that facilitate for small business or start ups, that are subjected to more and more rules and encumbrances that just kills innovation before it starts.
They say that space shuttle uses 80% of it's fuel before it clears the tower and this is true of the business on getting innovation off the ground.
How is government helping innovation clear the tower? In the US, I have been working with a startup www.docuthesis.com and we had access to an intern pool of resources that meant that we were able to achieve something we have no chance of achieving here in Australia.

This makes sense but there still needs to be the drivers and incentives. We will not improve innovation until the political culture supports it, the academic culture rewards it and funds are specifically targeted at innovation.

The principle of separating education from research comes up regularly as a possible solution to this issue, and whilst it has clear disadvantages, should not be dismissed or avoided either! But as Stephen rightly points out, it's about getting the drivers, incentives and enablers aligned. One of the key enablers for innovation is education, and the decline in our education standards has been one of the main influences on our similarly weakening performance in the innovation field.
It may be that Universities exclusively focused towards education are not sustainable as the knowledge driver, research, is lacking. But there is too much of a tendency towards rewarding academic performance based primarily on publication, with education becoming a (necessary) side activity!
There needs to be pragmatic measures implemented in the short term, and these may not necessarily be those we would chose in the medium or long term. Therefore, a clear segregation between educational and research institutions, with the intent being a short term increase of education performance, is worth considering?