Within weeks of taking office, Australia's new Labor government commissioned two major reviews--one of Australia's innovation system and one of Australian higher education. Taken together, these reviews will have major implications for the future of research and teaching in Australia for decades to come. This paper discusses the main recommendations of these reviews, puts them into context and examines the government's response. Although the innovation review was conducted first, this paper begins with the higher education review because its recommendations, at least in regard to universities, are broader. Those parts of the innovation review that are relevant to universities follow. The paper concludes with a brief discussion of what will happen next.