Time-limited spending programs do not create innovation ecosystems

A commercialisation program is unlikely to secure the industry-led collaboration that policymakers and advisers keep promising.

John H Howard, 15 September, 2026

Australian research and innovation policy keeps making the same mistake. It funds a program and then expects an ecosystem to grow where the money lands, and those are two different instruments doing quite different things. When the ecosystem fails to appear, the shortfall gets read as a delivery problem.

The real problem sits one step earlier in the category confusion that set the wrong instrument against the objective. This confusion has most recently been reflected in recommendations of the Strategic Examination of R&D (SERD), published as Ambitious Australia, and in subsequent commentary.  

The advocacy of trailblazer type programs provides a pertinent example. With the Trailblazer Universities Program, the Australian Government committed around $370 million across 2022 to 2026, to support six lead universities at up to $50 million each. It was an expenditure program, competitively assessed, with a finite life. Co-investment lifted the total above a $1 billion (Department of Education, 2022).

The Program had a four-year term, accountability upward to the Department and the Minister, and a supply-side logic that pushed research toward a market. In effect, the program was a bounded instrument designed to spend money efficiently and effectively and then to stop.

An industry-led, place-based ecosystem takes the opposite approach. It grows from the accumulated activity of firms and institutions in one location, with the initiative held by the firms that adopt, buy and use what the system produces.

There are many such models around the world (Breznitz, 2021).

Proximity becomes the analytical framework on the evidence that repeated interaction is how firms share people, copy practices and build trust (Howard, 2025). An ecosystem does not have an end date, a single owner or designated investor to answer to. It compounds or it decays, and nobody signs off on either.

The difference is not hypothetical. Design choices that suit a program can work against ecosystem logic. A competitive, time-limited, university-led grant is built for accountability and speed; a durable, demand-led collaboration is built for density and patience. Load the second ambition onto the first instrument and you get neither.

Three habits keep the confusion alive.

• Governments announce an expenditure program and expect an ecosystem to follow: one-off grants for a burst of activity do not buy either the density or the durability a place-based system needs.

• Advocates may claim a funded program is a demonstration that an ecosystem exists: a program can run its full term and leave on-going durable capability thin.

• Policy keeps loading the hope for industry-led collaboration: a short, competitive, university-led instrument delivering an expectation that it was never designed for.

Each habit costs something, and both come from a conflation that treats two separate instruments as one.

None of this is new. The evaluation of the Cooperative Research Centres (CRC) Program 25 years ago found centres that produced research outputs while durable capability stayed thin wherever the surrounding complements were missing (Howard Partners, 2003).

The lesson has been in plain sight ever since. Grant money can seed the accumulation of capability but an expectation that a competitive grant will result in sustained adoption and application is highly tenuous.

Adoption is the part that few grant programs address. Sustained adoption is contingent on management and absorptive capability, and Australian firms have lagged, and continue to do so on exactly that (Green & Agarwal, 2009). A cheque to a university does not build the demand-side muscle that turns a research output into something firms use at scale.

The accompaniment that counts most is the one few programs provide for. Despite submissions to this effect in a lengthy consultation process, the SERD proceeded regardless to commit this fundamental error in its recommendation architecture.

A program earns its place when it relieves a binding constraint an ecosystem cannot address on its own. Fund a missing testbed, a skills pipeline or a translational team that firms keep drawing on after the money ends, and the program has done real work.

The test is very straightforward.

Something firms adopt, apply and use has to outlive the funding term. A burst of grant-bound projects that outlives nothing has run a program and called it an ecosystem.

Four questions settle the choice before any money moves.

• Whose demand is organising the effort?

• Is the location incidental or constitutive?

• What is meant to survive the funding term?

• Which binding constraint is the money there to relieve?

With some rigorous assessment, the choice between a program and an ecosystem stops being a guess. Expectations of the Albanese government to get this right are high, and the risks for securing long-term growth and jobs have never been higher.

Allocating a program to an ecosystem objective wastes both, and the reverse wastes both the other way. Match the instrument to the objective. That is where doing either one well begins.

The NSW Government will be addressing this issue with its announcement on 10 September of a $150 million science and innovation fund to "coordinate strategic investments, deliver on government priorities, and turn the state’s research strengths into new businesses". The fund will "co-invest with NSW public universities before expanding to support other organisations across the innovation ecosystem", It will begin operating on 1 July 2027, contingent on the government's reelection.

References

Breznitz, D. (2021). Innovation in real places: Strategies for prosperity in an unforgiving world. Oxford University Press.

Department of Education. (2022). Trailblazer Universities Program. Australian Government.

Green, R., & Agarwal, R. (2009). Management matters in Australia: Just how productive are we? Department of Innovation, Industry, Science and Research.

Howard, J. H. (2025). The handbook of innovation ecosystems. Acton Institute Publishing.

Howard Partners. (2003). Evaluation of the Cooperative Research Centres Programme. Department of Education, Science and Training.

This Insight was first published in InnovationAus on 10 August, 2026

Dr John H Howard is executive director of the Acton Institute for Policy Research with a career in business and management consulting spanning more than forty years. He was a partner at the Big Four firm Ernst & Young, and in 1998 co-founded the management and policy advisory firm, Howard Partners. He is the author of The Handbook of Innovation Ecosystems (2025) and Making Sense of AI in 2026. John holds an honorary appointment at UTS covering science, research and innovation policy