When Australian scientists at CSIRO developed the technologies behind modern Wi‑Fi, it was a breakthrough that reshaped how people connect and communicate. The organisation secured some royalties, but the technology never became the foundation for a home‑grown industry. That experience captures a familiar Australian pattern: we are good at creating knowledge, but less effective at turning it into lasting economic capability.
For decades, Australia's economic model has relied heavily on adoption. We pride ourselves on being quick to pick up technologies developed elsewhere, and adoption will always matter. But adoption alone is no longer enough. One of Australia's productivity challenges arises from the fact that only 1-2 percent of our businesses engage in innovation that is new to the world. As the Productivity Commission has observed, many businesses may not realise how far they sit from the global frontier. It's like a track athlete running alongside the race leader, unaware that they're being lapped.
As the Strategic Examination of Research and Development has noted, the weak point is often experimental development: the messy, unglamorous work of moving from prototype to product. In the most successful economies, firms invest heavily in this stage, working side-by-side with customers. In Australia, the investment is lighter. Our universities are strong in basic research and have grown stronger in applied research. But too often ideas do not get pulled through to the market. The result is a conveyor belt of discoveries that stop short of the customer.
Translation matters. It means building stronger bridges between universities and industry, ensuring that innovative ideas don't just end up as journal articles but as products and services in the hands of customers. Research excellence is only part of the story: capability is built when researchers, entrepreneurs and industry practitioners work together.
Startups are an essential part of this picture. They are often the nimblest translators of new knowledge, where ambition meets urgency. Many of the world's breakthrough technologies have emerged from small, fast‑moving firms willing to take risks. Alongside this, Australia also needs established firms to do more of the heavy lifting, anchoring supply chains and investing in experimental development.
Competition policy is part of the equation too. Markets that are open, dynamic and contestable give new ideas a chance. Stronger merger laws help ensure that innovative challengers aren't quietly acquired and extinguished before they have a chance to grow. Curtailing non‑compete clauses encourages productive job mobility, and favours growing firms. National Competition Policy engages states and territories to ensure we can build more homes and more renewable energy generation capacity. These changes go to the heart of whether new entrants get a fair go, and whether incumbents expect to be challenged.
Capability matters as much as capital. Firms need customers willing to take a chance, engineers who can take designs through certification, and leaders who have the bandwidth to sell, ship and still sleep. These are areas where startup support organisations - the connective tissue of an innovation economy - can make a difference. At their best, startup support organisations provide test facilities, regulatory expertise, and connections that shorten the distance between an idea and its market.
The Startup Muster survey, now in its twelfth year, has shown us that there are significant equity gaps in who becomes a founder. Women, First Nations Australians and people from disadvantaged backgrounds remain under‑represented. An innovation system that overlooks so much potential is not only unfair - it is inefficient. Broadening participation will ensure more of our national talent gets the chance to turn ideas into enterprises.
Australia has never lacked ideas or grit. What it has lacked at times is a system that makes it easy for a founder to find a first customer, for a lab to find a manufacturer, and for a small company to grow into a large one without moving overseas. If we can tighten those connections - adoption plus creation, research plus development, startup plus scale‑up - then we can shape a more innovative, productive economy.
This is an edited extract from a speech to the Ecosystem Startup Leaders Lunch at UTS Startups in Sydney.
