‘Innovation’ pervades Australian policy discourse. It is hailed as the remedy for declining productivity, economic stagnation, and social challenges, appearing in political speeches, business strategies, and university mission statements.
Yet, for all its prominence, the term remains ill-defined. Its elasticity allows it to mean whatever the moment demands – inventions, ideas applied, technological advances, using assets in new ways, entrepreneurship, improvement, disruption, or change – without demanding clear priorities or actionable commitments.
While the word’s rhetorical power is undeniable, its conceptual vagueness may be at the heart of Australia’s underwhelming innovation policy performance.
As Godin (2015) and Fagerberg (2005) have shown, the concept of innovation has morphed across time and contexts, invoked as a universal good but rarely interrogated with rigour.
In practice, ‘innovation’ has become an undefined imperative – a banner for consensus that evaporates as soon as concrete action is required. This is not a trivial problem of semantics; it has material consequences for Australia’s policy capability, economic trajectory, and institutional credibility.
Machinery of government and the absence of ‘innovation’
The Australian machinery of government, which involves allocating legislative responsibilities, functions, and powers to ministers and departments is established under the Administrative Arrangements Order (AAO).
This is a legal instrument framed under the constitution and signed by the Governor-General on the advice of the prime minister. Neither the current nor recent iterations of the AAO mention the term ‘innovation’.
It is both telling and symptomatic of broader dynamics in Australian public administration and policymaking.
This omission is not accidental either. It reflects deeper structural, conceptual, and political reasons that go to the heart of how the Commonwealth government frames its responsibilities and allocates power.
The language of the AAO is typically precise, technocratic, and geared towards activities that can be clearly administered, regulated, or funded. By contrast, the term ‘innovation’ lacks the sort of fixed, statutory definition that would make it suitable for inclusion in a document designed to clarify administrative accountability.
This reflects a general reluctance within the government machinery to assign responsibility for something perceived as diffuse, systemic, and cross-cutting.
As a result, innovation remains ‘everybody’s problem and nobody’s job’ – diffusing accountability rather than concentrating it. (Godin, 2015; Hajer, 2003).
The AAO gives the Department of Industry Science and Resources specific responsibility for Technology policy, Critical technology policy, Science policy, Coordination of science research policy, Mineral and energy resources research, science and technology, and Economy-wide digital policy and coordination.
The Department of Education has responsibility for the Coordination of research policy in relation to university research.
Numerous departments are assigned specific responsibilities for research, including the departments of Climate Change, Energy, the Environment and Water; Defence; Education; Employment and Workplace Relations; Health, Disability and Ageing.
However, no department has been assigned responsibility for innovation.
This is no surprise. AAOs are typically concerned with functions – what government does – rather than what government seeks to achieve.
In this sense, innovation is usually seen as an outcome that emerges from a combination of research, development, regulatory settings, education, commercialisation, regulations, and many other functions.
Since AAOs are not designed to describe desired outcomes but to allocate functions, “innovation” is excluded as an explicit organising principle.
Including ‘innovation’ specifically in the AAO could be seen by the drafters as implying a willingness to assign real responsibility for systemic change – something governments have historically avoided, preferring instead to gesture in the direction of innovation through strategies, funding announcements, or rhetorical commitments.
Embedding it in the AAO would raise difficult questions about lines of authority, accountability, and resources. Who would be responsible for whole-of-government innovation outcomes? What levers would they possess? What cross-portfolio powers would be required?
The political cost of making such responsibilities explicit and the administrative challenges involved in coordinating genuinely cross-cutting agendas are significant.
As a result, governments prefer to keep ‘innovation’ at the level of strategy documents and ministerial speeches rather than hardwiring it into the machinery of government.
Thus, reflecting the core analysis from Dodgson et al. (2011), innovation policy in Australia is typically constructed as an amalgam of existing responsibilities rather than a distinct, integrated domain.
This omission further reinforces the tendency for innovation policy to be diffuse, fragmented, and frequently symbolic rather than a core focus of coordinated government action (Breznitz, 2021; Considine & Lewis, 2007).
Without a major change in thinking, it seems that innovation policy in Australia is destined to almost always be subsumed under functions explicitly assigned by the AAO, such as research and innovation or science and innovation.
For the time being and for the purpose of the AAO and innovation policy, this may amount to adopting a ‘usage’ definition of innovation as specifically technological innovation (Godin, 2015) that has demonstrable links to the technical change, productivity and economic outcomes.
However, defining innovation policy narrowly as technological innovation risks neglecting broader forms of innovation – such as organisational, social, cultural, and service innovation.
Such a definition also limits policy attention to measurable technical outcomes, marginalises non-technological sectors, and may stifle cross-disciplinary creativity, diversity, and adaptability, which are increasingly critical in complex, knowledge-driven economies.
Thus, if Australia is serious about transforming its innovation system, a first step would be to make innovation an explicit, accountable function of government – anchored in statutory language, embedded in AAOs, and resourced accordingly. Until then, ‘innovation’ will remain rhetorically central but administratively marginal.
Innovation, conceptual vagueness, and policy theatre
Australia’s lamentations about ‘lagging innovation’ almost always accompany international rankings, anecdotes of missed commercial opportunities, or headline-grabbing statistics about productivity. Yet, the discourse seldom ventures beyond surface-level diagnosis.
What exactly is broken? Is it the failure to translate research into commercial outcomes? A lack of venture finance? Skills shortages or risk aversion? Institutional fragmentation or systemic under-investment?
This syndrome – what Kingdon (2010) describes as “problem diffusion” – arises when the existence of a problem is widely felt but poorly specified.
The absence of specificity enables actors and advocates to speak in passive or collective terms: ‘Australia must…’, ‘We need to…’, ‘It is time to…’. This rhetorical imprecision diffuses agency, obscuring who actually has the authority and legitimacy to act.
Even when responsibility is nominally assigned – such as to a national agency or minister – those bodies may lack the jurisdiction, resources, or policy levers to address the cross-sectoral nature of innovation.
In this vacuum of clarity, Australian innovation policy frequently degenerates into policy theatre. Governments announce new hubs, launch glossy strategies and establish funds designed to signal action rather than to deliver transformation. The appearance of innovation takes precedence over the substance.
The repetitive cycle of reviews, white papers, and ‘renewed’ strategies reflects a deeper malaise – an institutional inability to agree on a theory of change, assign mandates, or commit to long-term investment.
As the promise of innovation repeatedly fails to deliver meaningful change, stakeholders grow cynical. When innovation is everywhere in the narrative but nowhere in policy, energy and credibility are lost.
Innovation policy and management practices
A critical yet under-explored dimension of innovation policy is its relationship with evolving management practices and the lived experience of citizens.
Too often, policy is constructed as a top-down directive – separated from organisational management and public sentiment realities. For innovation policy to be effective and adaptive, the flows of knowledge, practice, and influence must be multi-directional.
Innovation policy must actively encourage experimentation with new management models, learning from domestic and international best practices.
As artificial intelligence, data analytics, and digital platforms reshape how firms and governments operate, management practice becomes both a subject and driver of innovation.
Policy frameworks must accommodate and accelerate the adoption of these approaches—providing support for skills development, organisational learning, and the diffusion of advanced practices across sectors.
There must also be genuine engagement with citizens – not merely as passive recipients of innovation dictums but as active co-creators of new solutions and sources of knowledge.
The experience of Finland, Israel, and Korea demonstrates that successful innovation strategies are deeply embedded in a national mission, widely communicated and owned by the public. When citizens perceive innovation as meaningful – improving lives, creating jobs, or addressing shared challenges – political continuity and momentum are more easily sustained.
Finally, robust innovation policy requires an ongoing public conversation that is genuinely two-way. Policy must both inform and be informed by management practice and citizen experience.
This dynamic dialogue is essential to creating a persuasive and shared national narrative about innovation, ensuring that policies are technically sound, socially legitimate, and broadly supported.
Learning from international success
Countries that have made tangible progress on innovation have done so by facing hard choices about priorities, roles, and accountability.
Finland, South Korea, and Israel did not succeed by invoking ‘innovation’ as a slogan. Their transformations rested on defining shared, concrete problems, building coalitions for reform; assigning clear mandates to empowered agencies; and investing persistently in policy capacity and system stewardship.
Finland’s reinvention in the 1990s was underpinned by the recognition that escaping economic crisis required a knowledge-driven growth model, followed by the creation and empowerment of institutions like Sitra and Tekes with authority, resources, and policy reach (Edquist & Hommen, 2008; Breznitz, 2021).
South Korea’s leap from imitation to technological leadership was built on deliberate industrial strategy, targeted investment, and empowered agencies able to drive cross-sectoral coordination.
Why has Australia struggled to emulate these successes? The federal system disperses power and responsibility, complicating coherent national action.
Australia’s dominant economic paradigms constrain policy imagination – framing innovation in narrow terms of market failure and tax incentives rather than as the emergent property of complex, adaptive systems.
Moreover, Australia has been seduced by the appearance of innovation – mistaking startup counts and accelerator launches for the real work of capability building and institutional learning.
From rhetoric to reform
More rhetoric, funding rounds, or symbolic initiatives cannot overcome Australia’s chronic innovation policy malaise. What is required is a return to fundamentals – a willingness to clarify problems, assign responsibility, and build durable capability for long-term reform.
The innovation debate must move beyond abstraction towards specific, shared challenges. Whether addressing advanced manufacturing, the green transition, digital health, or inclusive growth, each domain requires tailored priorities and clear accountability mechanisms.
This specificity matters because it forces stakeholders to move beyond rhetorical consensus towards concrete commitments about resources, timelines, and success metrics.
Equally critical is the assignment of real authority to institutions equipped with cross-sectoral legitimacy and resources.
Australia’s tendency to create temporary taskforces and siloed programs reflects a deeper reluctance to invest in the kind of enduring, integrative institutions that can bridge boundaries and align incentives across public and private sectors.
The international evidence suggests that properly resourced and empowered system integrators are essential to translating strategy into coordinated action.
Reform also requires building coalitions to sustain momentum beyond political and funding cycles. Durable progress depends on trust, ongoing dialogue, and shared narratives that survive leadership turnover and policy fads.
This is especially challenging in a federated governance system where alignment across jurisdictions is inherently difficult, but precisely why institutional design and coalition-building become so important.
Perhaps most fundamentally, Australia must embrace a form of systems thinking that connects policy, practice, and public engagement.
Innovation is dynamic, adaptive, and inherently social, with immense tacit, institutional, and community knowledge embedded in practices, routines, networks, and traditions.
This requires genuine dialogue between government, evolving management practices, and citizen experience – creating multi-directional knowledge flows that inform policy design and implementation.
Without this integration, even well-intentioned reforms risk reproducing the same disconnect between rhetoric and reality that has plagued Australian innovation policy for decades.
Australia’s habit of invoking ‘innovation’ as a catch-all imperative has become a substitute for genuine strategy, clear leadership, and patient institution-building. The result can be policy theatre, repeated cycles of review, and declining stakeholder confidence.
To break out of this trap, the system must re-centre on clarity, capability, and coalition: diagnosing problems, empowering actors, investing in stewardship, and sustaining learning over time.
Dr John H. Howard is an expert policy analyst, economist, and innovation strategist with over three decades of experience advising governments, universities, and industry. As Founder of the Acton Institute for Policy Research and Innovation and a Visiting Professor at UTS, he brings an integrative perspective to complex policy challenges.
John can be contacted at john@actoninstitute.au
Comments from Emeritus Professor Mark Dodgson on an earlier draft of this Insight are greatly appreciated.
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