The government wants universities and public research institutes to focus less on having their research published in academic journals – the traditional measure of research success. Instead, they should work more closely with business to drive innovation in Australia's key industries.

Chief Scientist Ian Chubb is preparing a set of draft research priorities for consideration by the government's new Commonwealth Science Council.

The announcement follows criticism from Professor Chubb that Australia is the only developed country without a national science strategy.

"Australia performs strongly on research excellence, but we perform poorly by international standards in translating publicly funded research into commercial outcomes," a government discussion paper to be released on Wednesday says.

Australia ranks 29th and 30th out of 30 developed countries on the proportion of business collaborating with higher education and public research institutions on innovation, according to the OECD.

The proportion of Australian researchers working in business is significantly lower in Australia than other sectors and there is little movement between the public and private sectors.

The government is proposing to adjust block grant funding to place more emphasis on collaboration between researchers and industry. Bodies such as the Australian Research Council and National Health and Medical Research Council may also be required to recognise industry experience as well as publication and citation rates in academic journals when awarding competitive grants.

The government will also consider changing research training arrangements – including scholarships – to ensure that universities produce graduates with practical business, management and entrepreneurial skills.

The government discussion paper, released by Industry Minister Ian Macfarlane and Education Minister Christopher Pyne, says Australia could learn from the example of Germany.

Since Germany introduced national research priorities – climate and energy; health and nutrition; transport, safety and communication – research and development investment by industry had increased 20 per cent.

Universities Australia chief executive Belinda Robinson said the peak body had long championed the need for greater links between industry and universities.

"The paper recognises the importance of research excellence and the need for a balanced approach to changes in incentives and funding arrangements," she said. "UA supports the direction taken in the paper, but as with all policy changes, the detail of the specific proposals is critical."