When Government Stops Pretending
The research sector’s immediate reaction to last week’s pre budget announcements were completely understandable and unsurprising. Outrage over devastating cuts, claims of government abandoning innovation and frustration with hours of time and effort invested into applications for programs that have been abandoned.
The loudest reaction was to Australian Economic Accelerator (AEA) program’s $800 million redirection, with a significant backlash online. There were also lengthy discussions about the Department of Industry, Science and Resources leader moving over to Defence.
But maybe this is the beginning of something different. Recognition that government capability for commercial translation has structural limits. I am not sure I would call that failure; in a strange way one might even consider this progress?
AEA: Honesty About Structural Constraints
The Australian Economic Accelerator attempted to bridge research and commercialisation through university-based structures. Universities possess world-class research competencies with domain expertise in peer review, publication standards and fundamental discovery. What they don’t demonstrate is experience in commercial translation, and to be blunt nor should they.
In “Different Skills, Different Jobs,” we highlighted the fundamentally different professional capabilities. Research excellence requires academic competencies. Commercial translation requires commercial expertise. Both are essential, but neither can substitute for the other.
The AEA is not a failure, and there is no suggestion researchers lacked dedication or universities lacked ambition. But in the context of a thorough performance review it is clear departmental governance, institutional accountability frameworks, and academic assessment criteria deliver research outcomes, not commercial impact.
Closing programs in areas where government capability is lacking, and redirecting funding to areas where it can have impact (like CSIRO) is a promising sign. Australian business has listened to promises of university-led commercialisation support for decades, but as our economic complexity proves it simply isn’t materialising. Maybe now this time the government might try something different.
CSIRO: Respecting Organisational DNA
The $387.4 million reinvestment in CSIRO demonstrates something equally important; government investing back into institutions that are performing.
CSIRO exists for research excellence. Its organisational DNA is to serve scientific discovery, not commercial translation. As we discussed in the article ‘Fraunhofer Works Because of Commercial Discipline’, you cannot retrofit organisational DNA without destroying what makes an institution effective.
Germany’s Fraunhofer succeeds at commercialisation because it was designed from inception with 70 percent industry revenue requirement. That commercial discipline shapes everything. CSIRO was designed differently, for different purposes, and it excels at those purposes. The last thing we want is to stop them from focussing on what they do well.
Reinvesting in CSIRO’s research capabilities is sound economics. Let CSIRO be great at research, not forced into commercial translation. The amount is modest, but the direction recognises something critical: research excellence and commercial translation require different institutional structures. The UK Catapults learnt that the hard way.
Quinn to Defence: Appropriate Capability Alignment
Meghan Quinn’s move to Defence secretary sparked concern about Industry losing critical leadership, but I think that misses the point. Consider what Defence actually requires right now: procurement transformation, capability acquisition at scale, managing a $53 billion military spending uplift, overseeing the Defence Delivery Agency, executing the National Defence Strategy’s six technology priority areas.
Quinn brings 31 years Treasury experience, Bank of England background, expertise in macroeconomic policy, infrastructure investment, and large-scale procurement. That is precisely the skillset Defence needs for what it faces.
The Industry Department needs something completely different. Government capability to support industry requires leadership that understands what it takes to sustain a business in Australia.. It needs practical experience in commercial translation, business leaders who understand how to navigate markets, how to create competitive advantage, and how to address industry needs. Arguably it is one of the hardest areas for even the most experienced public servant to manage, given industry is furthest from what government does.
This brings structural clarity about where different competencies belong. Treasury thinking belongs in Defence right now, managing unprecedented capability acquisition. Industry deserves leadership with real commercial experience when government appoints Quinn’s replacement.
Tools Versus Tradesman
Dr John Howard’s recent proposal for an Innovation and Industrial Strategy Commission replacing IISA deserves thorough examination through this lens. When institutional architecture fails, we must first diagnose whether it was structural design or operator constraints.
IISA was well designed to begin with; it had a Cabinet-level coordination mandate, statutory independence, and a genuine cross-portfolio authority. But as a recent former Industry Minister discovered when trying to implement new programs, the reality was IISA had become pseudo department catch all. It was the “already legislated for that purpose” office used to defend the status quo.
Before replacing institutional architecture, we should examine whether the design was flawed or whether operator constraints prevented execution. If Cabinet doesn’t evaluate the ‘why’ of IISA’s impact, then any replacement will likely suffer a similar predictable fate.
What This Means
For years, companies heard promises about government-led commercialisation support that never materialised. Programs were announced, architecture designed, funding committed. But departmental governance, institutional accountability frameworks, and competency mismatches meant the support never arrived as promised (or in a timely manner).
With the abrupt halt of AEA, what is clear is that the ambiguity is gone. We know the translation gap between research and commercialisation still hasn’t closed, and research excellence still doesn’t automatically convert to commercial success. We also know world-class discoveries still sit stranded without pathways to market. But now at least the gap is explicit. It is no longer disguised behind institutional promises and good intentions, with structural constraints preventing success.
Government is acknowledging it cannot support commercial translation through research institution architecture. Instead, it’s redirecting funding toward what it can do. There is now transparency about where the gaps remain and that currently the government can do very little in real terms about it. It might be tough to hear, but it is brave to do, and that in its own way should be recognised.
Companies now know they must build translation capability independently. Research institutions know their mission should be to focus on discovery excellence, not commercial deployment. Government knows the institutional constraints that limit what departmental architecture can accomplish today.
The translation gap remains, but at least we can stop pretending institutional architecture will solve it and focus on building the commercial capabilities that actually will.