Malcolm Turnbull has urged an "ideas boom" in Australia, where risks are taken to set up the Googles of the future and preschoolers learn computer skills.
Tax breaks for risk-taking businesses and a boost in science spending lie at the heart of the four-year plan.
However, the government has yet to say how it will fund its $1.1 billion innovation and science agenda launched on Monday.
Mr Turnbull said Australia was falling behind in terms of maths and science teaching in schools, collaboration between researchers and industry, and businesses taking risks.
"The big gearshift here is a cultural one - if we can inspire people to be innovative ... I promise you our opportunities are boundless," he told reporters in Canberra.
The prime minister will chair a special cabinet committee to oversee the agenda and set up an advisory board to be known as Innovation and Science Australia.
The body's first job will be to review the existing research and development tax incentive program.
It's estimated 4500 start-up firms miss out on equity finance each year.
To overcome this, early-stage investors will receive a 20 per cent non-refundable tax offset based on the amount of their investment as well as a capital gains tax exemption.
And insolvency laws will be overhauled in 2017 to allow businesses to take greater risks.
The bankruptcy period will be reduced from three years to one and firms will be allowed to enter a legal "safe harbour" to develop a turnaround plan.
A new $200 million CSIRO innovation fund will co-invest in new spin-off companies and existing start-ups that will develop technology from the science agency and universities.
Biomedical research will benefit from a $250 million fund.
Two major science projects - the Australian Synchrotron and the Square Kilometre Array - will be funded over the next decade to the tune of $814 million as part of a $2.3 billion plan to build world-class research facilities.
Businesses will have easier access to the $5 billion spent by the government on IT each year via a new digital marketplace.
The government will also take a new attitude to public data, making non-sensitive data available by default, opening the way for a new wave of apps and other digital products.
Two programs will replace the existing six research block grants that go to universities.
A new entrepreneurs visa will bring into Australia up-and-coming talent and "landing pads" in Silicon Valley, Tel Aviv, Europe and Asia.
Schools are to benefit from $48 million over five years spent on programs from teacher training to encouraging preschoolers to explore maths and technology.
Opposition Leader Bill Shorten said the statement did not take away from the fact that $3 billion had been cut from science, research and innovation since the coalition came to office.
"It really doesn't go to make up the degradation of two years of Tony Abbott's government," Mr Shorten said.
Chief scientist Ian Chubb said he had long argued there should be a whole-of-government approach to science and innovation.