Is what is known from research on systemic innovation reflected in innovation policy, both as guiding principles and as actions? This paper highlights a major paradox in the translation of research on innovation into innovation policy in Australia. The innovation studies literature has established the central role of the vocational education and training (VET) system and VET-trained workers in technology generation, diffusion and incremental innovation. Research has also established that the pattern of innovation in Australia, compared with that in many other OECD countries, makes firms more reliant on VET skills to implement innovation. Despite this recognition in the innovation literature, this paper argues that the VET system is largely excluded from government innovation policy and programmes in Australia. Evidence for this exclusion is derived from a textual analysis of the principal Australian government policy statements and government-sponsored studies of the Australian innovation system, and from an analysis of the interest groups represented on government innovation advisory and policy structures. Tentative explanations are advanced for this exclusion and a number of important benefits are identified for the VET system and the wider innovation system arising from closer integration of VET into innovation policy.