AbstractUniversity research in Australia has in the past been devoted primarily to basic curiosity‐initiated research based on the English model. Most senior academic staff have had advanced degrees from British universities and the ethos of pure research has permeated their work. In 1984 68 per cent of all higher education research and development was classified as basic research. The impetus for change in the early 1980s has come largely from federal government. In particular shrinking per student grants have forced universities to try to supplement their incomes from other sources. This paper summarizes and analyses some of the new initiatives and concludes with an examination of future prospect