Australia's "piecemeal", "short-term" and "inadequate" approach to university and business collaboration has been blasted in a major report on Australian innovation.
The report, which compares Australia's innovation performance to those of 14 countries, calls for a more interventionist policy approach focused on long-term, tightly targeted investments. The current system is too reliant on indirect business tax breaks that spray money around without a strategic focus, according to the 142-page report by the Australian Council of Learned Academies.
Chief Scientist Ian Chubb will release the report, Translating research for economic and social benefit, on Friday. Professor Chubb said the findings showed the Turnbull government needed to implement far-reaching changes to industry and higher education policy to make Australia's economy more innovative. 
"Fiddling at the margins of policy will not secure the economic transformation we need to keep pace, let alone compete in an ambitious world," Professor Chubb said.
"Nations which do better than us are characterised by intelligent policies settings and programs which encourage a culture of innovation and collaboration.
"Like them, we should not idly wait in the expectation that something will come along to deliver the outcomes that other countries have achieved through national innovation strategies."
The report - which compared Australia to countries such as the US, United Kingdom, Israel and Finland - found Australia was squandering the opportunity to seize the economic benefits of its research discoveries.
"The contrast with Australia is stark, and our review shows how our policies and supportive programs are piecemeal, opportunistic and almost invariably short-lived," the report said.
"Australia's measures to support the translation of public sector research have been found to be inadequate."
The report made 15 recommendations including:
     introducing programs to facilitate or provide venture capital for start-up companies   shifting the balance away from research and development (R&D) tax incentives to direct funding   expanding opportunities for university students to have work placements during their degree   introducing metrics to reward university collaboration with industry   developing a long-term innovation strategy, beyond electoral cycles, that plays to Australia's strengths.    
"This project has found that Australia is overly reliant on indirect support for business R&D through the R&D tax incentive," the report said.
"Shifting the balance of government support for business innovation to greater use of direct measures such as grants, loans and procurement contracts would allow a more focussed and targeted approach to support for research collaboration and translation."
The report calls for Australia to consider adapting overseas programs such as a Danish scheme that provides vouchers of up to $100,000 to help small to medium enterprises collaborate with universities.
Other models include Singapore's National Research Foundation, which finances venture capital funds to provide early stage investments in technology start-ups.
Prime Minister Malcolm Turnbull has flagged changes to university research funding to better recognise engagement with industry and to end the "publish or perish" culture of academia.
Industry, Innovation and Science Minister Christopher Pyne said: "If we're going to excel in the area of innovation, we cannot back away from criticism.
"In this report we are being compared to high-performing innovative nations, and it is important we learn from their strategies."
Universities Australia chief executive Belinda Robinson said: "This is a wake-up call about the need for smarter national investment in wealth-generating research. To successfully compete with our smartest competitors on innovation-driven prosperity, we need a long-term, systematic approach."
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