TREASURER Joe Hockey has ordered an inquiry into the laws governing Australia's intellectual property.
Fulfilling a key recommendation of the Harper Competition Review, the Productivity Commission will examine whether the laws strike the right balance between promoting competition and protecting IP.
The year-long inquiry will investigate the potential for more creative innovation in Australian business and aim to reduce compliance costs and clarify the actual IP laws.
It will also examine the effects of Australia's IP laws on trade, the wider economy and how such laws fit with research subsidies.
However, while a Senate inquiry into tax avoidance has highlighted the practice by companies of registering IP in foreign countries with low tax rates, that subject has not been explicitly included in the inquiry's terms of reference.
The inquiry comes as the Senate's economics committee investigates the nation's innovation system, with a report due in mid-October.
That inquiry has heard from more than 180 IP law-yers, businesses, universities and academic experts proposing various plans to improve innovation and competition.
The Productivity Commission's examination will take the Senate committee's findings into account alongside recent government reports on the patent system and digital economy.
A statement from Mr Hockey's office said the nation's approach to IP was "vital to encouraging Australia's future productivity and economic growth".
"We need competitive and flexible arrangements to support businesses to strive for efficiency and innovation," it said.
The Productivity Commission will soon call for submissions.