From a period with relatively low industrial research and development, and little collaboration between the public and private sector researchers, there has been a significant growth in industrial R&D in Australia in the 1980's. Private sector R&D, with a particularly high growth rate in software, has developed as a firm outcome of government policies and funding programs. Key opportunities have been determined in the telecommunications and software areas, and these are targeted by government programs of funding for strategic research. The grants schemes have been expanded and now encourage market/product oriented research with expectations of firm commercial outcomes for the benefit of Australia. All encourage collaborative research, between the public and private sector, and are moving to address the issue of commercialisation. These linkages are crucial, and are leading to multidiciplinary research and development teams. Some examples of collaboration are addressed in the telecommunications area, and conclusions drawn regarding the motivational and business issues which must be faced for a successful research, development and commercialisation outcome.