The development of a uniquely Australian system of innovation and its relation to the vocational education and training (VET) system is considered in this discussion paper. Richard Pickersgill argues that the Australian system of innovation fits the pattern of incremental innovation and diffusion of technical knowledge. He focuses on arrangements prior to the formation of the technical and further education system in the late 1970s, and concludes that the diffusion of knowledge and the development of a workforce capable of developing innovative local technical solutions has long been the domain of VET institutions in Australia.