The talk around universities has changed much in recent months.

For the past two years we have been arguing about how to fund the system. Budget cuts were proposed, students marched, senators blocked.

A new prime minister, a new minster for education, and as of yesterday, a new innovation statement. Suddenly it is a different conversation.

Now the moment is about innovation – why is Australia so poor at commercial development of new ideas, and how can universities help?

It is a welcome change of topic, a discussion worth serious attention. The latest UNESCO and OECD data about the Australian innovation effort are not encouraging, so the new policy push is timely.

Fortunately, while this new impetus is very welcome, there is much already in place to build on. Business enjoys a generous research and development tax concession, while universities can access schemes designed to foster collaboration. New funds and incentives to support venture capital and early-stage commercialisation of research and innovation can take us a step closer to the ‘ideas boom’ Australia needs to make our economy more innovative, more productive, and more diverse.

Alongside these national initiatives, and many state-based programs to encourage start-up businesses, there is a great untapped national resource: students and recent graduates who will carry new ideas from the classroom into businesses. Strong demand for incubator programs on campus suggests a new generation has embraced the start-up aspiration.

Across the nation new companies are forming around innovative technologies. Nurtured by university accelerator programs and volunteer entrepreneur mentors, the start-up movement sees many of our best and brightest put aside traditional professional pathways for the world of invention.

Here is a big part of the future – brilliant minds, encouraged on campus to think about a start-up future, supported through programs to instill business skills, helped by willing angels.

Not just universities but medical research institutes, hospitals and private consortia have created incubation space, prizes to support winning teams to develop their ideas, and networks of support for promising business ideas.

These emerging companies join a growing number of university spin-outs – technologies developed over the past decade and now in the market. New vaccines, pharmaceuticals, dentistry products, supplements for animals, materials and IT programs have been supported by investors to foster growth, or sold outright and the proceeds reinvested in university-run seed funds.

In an ideal world, the precincts around Australian universities would already resemble those of Silicon Valle or Cambridge. In time they might. More likely, we will develop distinctive local patterns that reflect the broader realities of the Australian economy – a predominance of small to medium firms, clustered around universities and public agencies, all contributing to the local innovation ecosystem.

Australia could benefit also from welcoming home more of the diaspora – the million or more talented people living abroad, many with the managerial experience to help foster the emerging generation of entrepreneurs.

Translating research into social outcomes is an extension of the traditional university mission. Teaching young engineers, scientists, social entrepreneurs and professionals has always been the role of campus, and continues. Students are exposed to the research of academic staff through teaching, and some take ideas they encounter to create new industries.They may be joined by professors who combine academic work with a role in enterprise.

This model of academic engagement so well-established we often fail to notice the practice.  But reflect for a moment on health research.  Around half of all Australian research money is distributed to medical and health projects. Much of this research in turn goes to clinical practice, in which academics treat patients while pursuing research, with direct benefits to health outcomes. Not all research returns are measured in new patents. Much of our best medical research tests, informs and improves clinical work. The very high quality of health outcomes in Australia, among the best in the world, reflects an excellent return on this research investment.

In medicine, teaching, research and engagement are closely related. So too across the public sector. Already many linkage grants are awarded to consortia involving government agencies. As in health, research outcomes translate into policy interventions and better program design. Such benefit is not measured in OECD and UNESCO data on commercial translation, but matter for the society we want to be.

Our challenge is to take this model of the contemporary university to other sectors, so that academic engineers also work with industry, and industry in turn values working with universities around new technologies and production techniques.

Universities can train a new generation of business innovators, share existing research platforms, and work closely with commercial, government and community partners. If the new conversation around innovation moves us closer to this vision, it will be a worthwhile discussion indeed.

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Glyn Davis is the Vice Chancellor at the University of Melbourne.

This is the sixth piece in CPD’s ‘Secret Santas for Australia’ series. Each day we will reveal one ‘gift’ of good ideas from a prominent Australian on a policy issue close to their heart. You can see the full set here.