Universities Australia has launched "Keep It Clever", a new policy statement that argues Australia's economic future depends on higher education.
And with global economic activity moving further towards Asia, there are calls for universities to better engage with the region.
The university sector is pointing to recent findings that as technology transforms entire industries, 40 per cent of existing jobs are likely to disappear within in the next two decades.
To ensure Australia is well-prepared for these changes, universities say it needs a completely new strategy.
Universities Australia Chairman Professor Barney Glover says investment in research and innovation is essential.
"Our policy statement calls for a radical rethink and commitment from government to create the conditions for innovation and prosperity to flourish."
These conditions include investment in technology and innovation programs, and the creation of a "Student Innovation Fund" to encourage entrepreneurship.
Professor Glover says along with technology, a massive economic shift is driving the changes.
"Australia is in the early stages of a period of seismic change. Change at a pace and magnitude not seen since the industrial revolution. The centre of global economic activity is shifting towards Asia."
Professor Ien Ang is the co-author of a report called Smart Engagement with Asia, released earlier this year.
It looks at ways Australia can better engage with its neighbours.
Professor Ang says Australia must become far more committed to developing long-term relationships with the region.
"Australia is going to become more and more interconnected and interdependent with Asia. As a result, we as a nation have to be much more smart in our ways of engaging with Asia."
Professor Ang says many of Australia's international students are from Asia.
She'd like to see universities develop better ways of using this to their advantage.
"Australian universities depend very much on international student income. And many of these international students are from Asia. What universities are generally not good at yet is to actually actively engage with the students in increasing, our knowledge about Asia, our contacts with Asia, our relationships with Asia."
Professor Ang says local engagement could also contribute to Australia's economic development.
"Already in Australia, Asian Australians really, who actually have the cultural resources, the linguistic skills and the social networks to engage in a very positive and effective way with Asian countries."
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