There's definitely something to be said for finally having a minister dedicated to the areas or research development and innovation in the Federal Government. And certainly when I met with Senator Kim Carr together with a group of IT industry representatives a few months ago, he's making the right noises regarding the sorts of approaches which would lead to a more innovative economy.

What we need to see now is some action. Specifically we need the government to adopt legislation which encourages what might be termed a "virtuous circle of innovation" within the Australian economy.

We don't need a hand out, and we don't need any extra money. We need a series of approaches which encourage investors to put their money into enterprises which lead to the creation of intellectual property, which can go on to make money in the global economy.

The investors exist, and the money exists, but thanks to the current legislative climate, it is invariably safer and more profitable for investors to focus on real estate speculation, rather than sinking their funds into a five person start up with a great idea.

Virtuous Circles of Innovation are created where multinational companies are encouraged to locate their research and development labs here in Australia, and train local staff to be innovative at the cutting edge of technology and develop products for the global stage.

While of a tremendous benefit in and of themselves, such labs also have a tendency to foster talented innovative individuals who use their experience in the larger labs to take and spawn their own start-ups. Which can then grow into multinationals themselves, or grow up and be bought by other multinationals, and so the game goes on...

And the great part of it, the same legislation cleverly drafted could achieve both these goals.

But the government is advised to move cautiously. In the 1980's there was a program called the Partnership for Development Program, which encouraged multinationals to demonstrate that they were investing in local technology companies in order to win government business.

While the intent was great, in many cases it lead to a lot of money being paid into short-sighted schemes, just so the multinational could be "seen-to-be" doing the right thing, while programs which deserved investment went unnoticed.

The other challenge with this type of system is that if they are not designed properly they can easily be seen to be placing un-due, or anti-competitive pressure on multinationals, and may even contravene international fair trade treaties.

What we need is a set of legislative changes and incentives to encourage both international and local investors to put their money into research and development, and early stage start-ups, so we too can claim a multinational, like Nokia, CheckPoint, Google, or even Citrix.

I have to admit, I have a personal interest in this area. Along with a handful of other Australians, and sadly it is only a handful, I am what you call an Angel Investor. Without recourse to any tax breaks or incentives I provide what's called mezzanine finance to small companies with great ideas, that just need a bit of a hand to get their idea into a new market, or take their technology to the next level.

What I'm doing makes no sense from a personal finance point of view, because in the existing tax climate it make far more sense for someone like me to invest in property or Blue Chip stocks, despite the fact that neither of these actually generate IP on which the next generation of companies and jobs might be built.

What we need is for the government to look for sensible ways to unlock some of these investor funds by making it more attractive to invest in IP creation, rather than in property speculation.

Not only will such an approach see local investment funds targeted towards IP creation, it will also see multinationals more likely to return the profits they make in this country back into local industries and technologies.

With more that 25 years experience in research and development of operating systems and multi-user technologies, Martin Duursma is the CTO Office Chair for Citrix Systems, Inc. & Vice President of the Citrix Advanced Products Group. Martin Duursma holds a Bachelor of Computer Science and Bachelor of Electrical Engineering degree and is a member of the IEEE (The Institute of Electrical and Electronics Engineers).