"In terms of the national innovation and science agenda, there will be a lot in there that you will be able to write about with respect to changes around tax, bankruptcy, and the way we treat tax losses," Mr Pyne said on Tuesday.

"We want to create an ecosystem that encourages exactly the kind of behaviour that we are wanting to see in Australia."

Failure a 'public good'

Mr Ferris has been helping the Turnbull government write the innovation statement and said he came to the role with "scar tissue" after experiencing his own investment failures since establishing the country's first venture capital firm in the 1970s.

"The government will be looking at whether the income tax deduction scheme can be more aggressively offered to compensate for that early risk and also whether capital gains tax, if people hold investments long enough, should that be relooked at?" Mr Ferris said.

"Certainly, I would expect and hope that in this process, we will see more activity, more money coming from private high net worth investors into start-ups, into the accelerator incubator ecosystem that is surrounding that and growing rapidly in a sophisticated way in Australia."

Mr Pyne said the country was a "risk averse nation economically" and the government wanted to emulate the entrepreneurship culture of Israel where the public had come to accept that not all taxpayer-supported ventures would result in commercial success and the cost was part of the "public good" in the same way not all taxpayer-supported university students would necessarily go on to high-paid careers.

"In Israel, the chief scientist, for example, told the Prime Minister not long ago, when asked this very question about the media handling of failure in Australia and how they did it in Israel," Mr Pyne said.

"Israel as a venture capital government fund which sometimes invests in businesses that don't succeed. In our media culture there would be an instant story on the front page of your newspaper or someone else's saying which minister allowed this to happen? That person should be sacked, resign or run out of town.

"In Israel, the chief scientist said actually we have convinced the Israeli public that business failure can be a public good."

Mr Pyne flagged that Australia's defence spending - including the highly contest tender for Australia's next generation of submarines and the $43 billion Future Frigates project - would provide a large boost to the nation's high-tech and advanced manufacturing industries.