Service innovation is of increasing importance in the Australian economy, yet it remains a largely neglected area of study. Recent studies overseas have shown that services are becoming more engaged with innovation, and that service innovation is complex and multi-dimensional. Official R&D and business innovation statistics in Australia are examined, and they reveal that service providers across all service industries in Australia are performing R&D and are actively innovating, a finding that is consonant with the overseas studies. However, innovation performance varies across and within service industries, reflecting differences in the nature and structure of those industries. A clear need for further research is identified, both to provide a clearer understanding of the nature of service innovation and to provide a basis for practical recommendations.