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

For decades, Australian innovation policy has focused on the "valley of death" where good ideas fail to become commercial products. Today, an algorithmic revolution driven by data, AI, and quantum computing is forcing a complete rethink of the path from laboratory to market. The focus of value creation is shifting from physical 'atoms' to 'algorithms' that command them. This shift creates an 'infrastructure inversion' where computational power and massive datasets are now cri

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 This Innovation Insight argues that the real challenge lies in outdated models of measurement and policy.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.

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

Australia’s search for an industrial policy has been long and contested. Centralised models drawn from small unitary states do not fit the realities of a vast federation with diverse regional economies. This Insight argues that the way forward is mission-oriented and place-based: the Commonwealth defines national missions and platforms, while States and regions adapt and deliver through their own specialisations, building resilience, competitiveness, and innovation.