A major new review sets out a coherent plan to reform Australia’s innovation system. But the real challenge is not design – it’s whether the government can afford and deliver it.

The Strategic Examination of Research and Development, released on 17 March 2026, is the latest in a long line of reviews diagnosing Australia’s innovation system and proposing reform. Led by Robyn Denholm, with Ian Chubb, Fiona Wood and Kate Cornick, the panel sets out 20 headline recommendations spanning governance, foundational research, business incentives, capital markets, workforce, and the role of government.

The panel’s warning against “cherry-picking” its recommendations is explicit and emphatic. It argues that they are “mutually reinforcing” and that “adopting only parts will be another example of incremental changes and Band-Aid solutions”. This framing is analytically sound. From a political economy perspective, it may also describe what is likely to occur.

The SERD package is, at its core, a complementarity problem. Each recommendation depends on others being in place before it can function effectively. The proposed National Innovation Council is the keystone. On a close reading, a substantial share of the 35 sub-recommendations appear to depend on the NIC, the pillar structure, National Strategy Advisory Councils, or National Strategic Initiatives being operational.

This is not a design flaw. It reflects the reality that innovation system reform is inherently systemic. The difficulty arises when systemic reform encounters the sequential logic of budgets, legislative programs, and political cycles. Governments do not implement systems.........

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