Research and development is moving from laboratory-based models to digital platforms that integrate data, software, and AI. This Insight examines how many global firms now operate as de facto research environments, the implications for Australia’s capability and sovereignty, and the changes required in policy, measurement, and national strategy.

The productivity lag from AI reveals competing logics: automation that replaces labour to cut costs versus augmentation that expands capability to create value. For innovation ecosystems, this choice is existential. Strict safety regulations risk creating moats favouring large incumbents, while unrestricted deployment threatens research quality. The narrow path requires public interest AI infrastructure, risk-weighted governance, and incentives rewarding high-impact discovery

Artificial intelligence is reshaping industries, yet its productivity impact remains elusive. This Innovation Insight argues that the real challenge lies in outdated models of measurement and policy. To navigate the AI era, governments need a new playbook—one that measures transformation, not just outcomes, and builds the adaptive capacity of national innovation systems.

Current debates about artificial intelligence often miss the fundamental difference between AI that replaces human capabilities and AI that amplifies them. Drawing on lessons from economic history and organisation theory, this insight argues for a focus on augmentation. For Australia, choosing to augment human expertise with AI is critical for building an economy that thrives on creativity and avoids the long-term risks of deskilling our workforce.

Australia measures productivity and R&D but neglects consistent data on business investment in skills. Too often, employers call for government subsidies rather than funding structured training themselves. In an economy shaped by AI, quantum and digital disruption, innovation requires companies to take responsibility for workforce upskilling. Without systemic change linking growth to human capital development, Australia risks falling further behind its international competito

The tectonic shifts in the global economy—from manufacturing to services, from tangible goods to intangible assets—demand more than incremental adjustments to our statistical and analytical frameworks, Australia, a nation increasingly powered by services and innovation, risks undermining its competitiveness by clinging to an outdated framework. The case for adopting modern, flexible, and globally aligned industry classification systems has never been more compelling.

Australia has achieved remarkable success in consumer-facing applications. But it faces a crucial challenge developing platform technologies