I must say I strongly disagree. Innovation comes out of...

I must say I strongly disagree. Innovation comes out of university, and by nature is a lengthy, expensive, and painful process. Thousands of ideas needs to be pursued and thrown away for one to succeed; and from those who succeed, very few gets to be commercialised due to many technical/financial hurdles along the way. Science is an incremental process, and many seemingly irrelevant building blocks needs to be developed in several disciplines before they can be put together to ultimately benefit the public.

Successful nations like US, for decades, realised this and had laws in place to create incentives for innovations in universities, and help commercialising them. Other not-so-successful nations chose to dig resources out of dirt to feed the population. Australia as been late to the party (even some developing countries do better than us), but has been taking some good steps in the last decade or so.

Politicians most often have a populist short vision for the next election and don't care about research funding which takes years to bear fruit. And those politicians who care have a hard time justifying that to average Joe on the street who can't see any relationship between solving a physics problem in the university and paying his bills/taxes.

So no, those PhD students, which are by-the-way heavily underpaid for what they do, are not funded just to give them something to do. Real-world experience is not innovation, but is merely an exercise of existing old knowledge (which rest assure university people already know). Innovations like TTT come out of university with small unrelated contributions from thousands of individuals over many years.