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Based on 15 years of arts and innovation literature, this paper explores the central proposition that the arts sector - particularly the performing arts, visual arts and crafts, new media arts and creative writing - should be included in Australian Government innovation policy development and play a significant role in national innovation. After a brief overview of innovation policy and the national innovation systems approach in Australia, we examine the marginal place of the arts in Australia's innovation agenda and various attempts to include them. We identify the principal voices that have argued for arts and innovation development: the humanities, arts and social sciences (HASS) sector, digital content industries, arts education and university research, and new media arts. After three main periods of arts and innovation policy activity from the mid.1990s (when the importance of innovation as a key driver of Australia's prosperity was recognised) to early 2008, a fourth period has opened up as part of the Australian Government's Review of the National Innovation System in 2008.